When SCE&G abandoned its nuclear project in July 2017, leaving its ratepayers with a $5 billion debt and no new electricity generation, the public was rightly incensed, and the legislature took action. That crisis has now largely been resolved with over half of the nuclear debt taken off the customers and a 15 percent rate cut.
When Santee Cooper abandoned the same nuclear project in July 2017 leaving its direct and electric cooperative ratepayers with a $4 billion debt and no new electricity generation, the public was rightly incensed. However, the legislature has not taken any definitive action to resolve this crisis.
Make no mistake about it. The Santee Cooper financial crisis is much bigger than that of SCE&G.
Santee Cooper, a state agency, has ratepayers it serves directly and through local electric co-ops like Aiken Electric, Edisto Electric and Tri-County Electric. Every one of these customers is paying higher rates today and will pay even more in the future for the $4 billion in nuclear construction debt. This debt is increasing at $1 million a day.
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In addition to this debt, Santee Cooper has more than $4 billion in additional bonds that need to be paid. The total debt for the ratepayers is nearly $9 billion today and, unlike SCE&G, Santee Cooper has only one place to get the money to pay off the debt -- the customers.
So, every day the state legislature puts off resolving this crisis, preferably by selling Santee Cooper to a private utility, the worse off residential and business customers become.
Unfortunately, the State of South Carolina does not appear close to making the correct business decision regarding Santee Cooper as it did with SCE&G -- selling the utility to a well-financed private utility that agrees to eliminate the debt and reduce future rates.
The problem might be that Santee Cooper is a state agency and thus the legislature is more cautious in cutting it loose.
Will the new owner guarantee to eliminate all the debt?
Will the new owner guarantee lower rates in the future?
Will the new owner guarantee to be a good steward of all the lake properties?
Will the new owner guarantee to help displaced workers find new jobs and receive needed training?
Will the new owner guarantee to maintain a corporate headquarters in the same South Carolina location?
The legislature has the ability as part of the sale of Santee Cooper to make sure the answer to all these questions is “YES.”
However, my organization, the South Carolina Small Business Chamber of Commerce, would like one more condition for the sale of Santee Cooper. Retire the coal plants.
Energy from these old plants is more expensive and more carbon-polluting. Solar and new-generation gas plants offer the opportunity for more cost-effective generation and less contribution to climate change. For years we have advocated for reducing carbon emissions to slow the rising seas and flooding that impacts our coastal economies. A fast transition from coal should be an essential condition of the sale.
The legislature needs to move as quickly as possible to protect the Santee Cooper ratepayers and environment. It already has 14 proposals to consider with four of them deemed to meet the legislature’s conditions.
Resolution of the Santee Cooper financial crisis should follow the same path taken for resolving the SCE&G financial crisis —the sale to a private utility.
Every day that a sale is delayed is a million more dollars of debt on the customers or one million more dollars harder for another utility to deliver the benefits the customers deserve.