COLUMBIA — Legislation introduced Wednesday would task Gov. Henry McMaster with selling South Carolina's only state-owned utility, taking the decision out of the Legislature's control.
The proposal by Senate President Harvey Peeler would leave the question of what to do with debt-laden Santee Cooper in the hands of a Republican governor who has strongly advocated selling the power provider for over a year.
The legislation directs McMaster to seek bids through the Department of Administration, a cabinet agency under the governor's control. The sale would have to benefit the utility's customers as well as taxpayers across the state, the proposal says.
Peeler, a Gaffney Republican, said the utility's future has been "looming over us" for too long, and legislators should not be involved.
"The time has come to sell Santee Cooper," he said. "They are crippled by debt. ... We have to do this, and this nonpolitical process is the right way to get it done."
Peeler's proposal came a day after a special Senate committee weighing what to do peppered Santee Cooper executives with questions they couldn't answer, for the second consecutive week.
"They brought in Santee Cooper brass last week and it was an embarrassment. I thought maybe this week, they’ll be more prepared. Yesterday was 10 times worse. There’s no help for Santee Cooper," Peeler said. "I've lost sleep over it."
Senate Minority Leader Nikki Setzler, a study committee co-chairman, agreed the presentations were "absolutely astounding in their lack of information and cooperation. In my opinion, I do believe Santee Cooper can no longer continue to operate the way it is."
Still, he added, he's undecided on the best path forward.
By state law, only the Legislature can approve whether to sell the New Deal-era utility, which provides electricity to about 2 million customers throughout the state, mostly through 20 electric co-operatives.
A law, passed during ex-Gov. Mark Sanford's tenure, bars utility executives from even broaching a potential sale on their own.
McMaster has advocated selling Santee Cooper since soon after the public utility, along with partner South Carolina Electric & Gas, bailed on completing two reactors at V.C. Summer Nuclear Station in July 2017 after jointly spending $9 billion.
The governor has said selling the utility headquartered in Berkeley County, or parts of it, could be the only way to provide relief to its customers. The partially completed reactors account for half of the utility's $8 billion debt.
Weighing a sale was expected to take at least a year in the Legislature. If the legislation wins approval, McMaster is expected to move faster in finding a potential buyer.
"We’ve known all along that the one thing we can’t afford is inaction," McMaster said Wednesday.
Legislators have been studying whether to sell the public utility. Peeler said the joint House and Senate committee, organized last year, has accomplished its primary role in finding a "robust, private market."
Fifteen bids submitted as part of the committee's review came from 10 separate investment firms and power companies.
The bids, announced last month, included offers for all or parts of the public utility or to manage its power plants and utility lines.
ICF, the consulting firm hired by the Legislature to evaluate the offers, said only four of the bids met the criteria legislators sought. The four offers from undisclosed bidders offered to buy Santee Cooper from $7.9 billion to $9.2 billion and absorb the 85-year-old utility's debt.
The legislation introduced Wednesday is highly unusual. South Carolina legislators rarely offer to relinquish power to the governor.
In 2005, when it appeared Sanford was trying to sell the utility — which he denied at the time — legislators passed the law ensuring only they could do so. Lawmakers even limited the governor's powers over his own appointees to the utility's board.
Both chambers must approve the resolution, which would function as a temporary law.
Asked about Peeler's resolution, House Speaker Jay Lucas, R-Hartsville, noted it was the House that set up the joint study panel.
"The House took the lead in starting this sale process and looks forward to continuing evaluating potential sale options," he said.
The measure appeared on the fast track, up for debate by the full Senate Finance Committee — bypassing the normal subcommittee process — within a few hours of its introduction.
But the committee quickly put on the brakes, with senators saying they need to know the details before agreeing blindly to what amounts to a fire sale.
Senate Finance Committee Chairman Hugh Leatherman, R-Florence, insisted the measure was akin to "kicking the tires" — that it directed McMaster's office to evaluate the possibilities without necessarily going through with a sale.
Senators of both parties disputed that by reading the measure aloud, marking a rare public disagreement with the powerful chairman.
"This resolution is as clear as it can possibly be. This says the governor 'shall then execute the sale.' That’s what this says. It’s not fuzzy. It’s not full of legalese," said Sen. Larry Grooms, whose district includes the utility's headquarters.
The committee took no vote. Grooms promises to filibuster the proposal if it reaches the Senate floor.
"I will do everything I can to protect my constituents from needless rate hikes," said Grooms, R-Bonneau.
Grooms said the proposal took him completely by surprise.
"What's the hurry?" he asked, saying the utility doesn't plan to hike rates for two years. "Once the damage is done, you can't undo it."
The nuclear debacle accounts for 4 percent of Santee Cooper's rates. The utility expects to phase in an additional 7 percent over several years, starting in 2021, confirmed utility spokeswoman Mollie Gore.
Grooms contends some of the submitted bids aren't even doable and can't reduce rates. As a public utility, Santee Cooper pays no property taxes. If a private company takes over, the prospect of paying those taxes alone could cause a big jump in rates. At the very least, the claims and consequences should be thoroughly evaluated, Grooms said.
Property taxes represent just one of several hurdles standing in the way of cutting Santee Cooper’s rates in the private sector.
The utility’s new owners would have to pay off or refinance billions of dollars of debt, for starters, and a private company would almost certainly have to pay higher interest rates. They’d also have to start paying income taxes.
The state’s consultants found that even if a private-sector owner paid off all of Santee Cooper’s nuclear project debt, the savings would be washed out by taxes and other expenses.
So, for ratepayers to benefit, Santee Cooper's new owners would have to slash further, possibly shutting down its coal-fired power plants, for example, but such cuts add other layers of uncertainty.
Thad Moore contributed to this report.