By Barney Blakeney
Proponents for the sale of Santee-Cooper electric cooperative say the abandonment of the VC Summers nuclear plant in 2017 sealed the fate of the state-owned hydroelectric power generator. South Carolina’s only state-owned electric and water utilities agency cannot survive as a sustainable business unless it becomes privately owned, they contend.
Founded in 1934 as a public service project that provides electricity to rural communities, Santee Cooper created two lakes while building hydroelectric dams and power plants. Headquartered in Moncks Corner, it is one of the largest power providers in South Carolina. Santee Cooper directly serves more than 165,000 residential and commercial customers in Berkeley, Georgetown, and Horry counties. Santee Cooper supplies power to the cities of Bamberg and Georgetown, 30 large industrial customers, and Charleston Air Force Base. Santee Cooper generates the power distributed by some of South Carolina’s electric cooperatives.
Among the proponents for the sale of Santee Cooper is Club for Growth South Carolina, a watchdog and advocacy group. Advisor Robert J. May said there are a few reasons the club advocates the sale – foremost because the club believes a private owner can serve Santee Cooper’s customers more cheaply and, there no longer is a need for a state-owned power company. “Government shouldn’t be involved when a private company can do it cheaper for consumers,” May said in a recent interview.
He pointed to the results of a statewide survey of some 1,000 households conducted by the club in September. Only about half the respondents are familiar with the VC Summers project that leaves Santee Cooper customers on the hook for the debt associated with the project. The co-op’s total debt, including that associated with VC Summer is more than $15 billion, May said. To cover that debt, ratepayers can expect a rate increase of about 13 percent if Santee Cooper’s sale is kicked down the road until 2022. That’s on top of about a 15 percent rate increase since 2012.
The legislature’s focus in the current legislative session understandably is on education, May reasons, but an equal focus should be placed on the Santee Cooper situation as has been placed on resolving issues surrounding SCANA Corporation, he said.
Another proponent for Santee Cooper’s sale said, “If Santee Cooper isn’t sold, rates must increase to pay the debt. If a purchase deal is structured correctly, Santee Cooper’s debt – both the $4 billion in nuclear debt and other outstanding debt – would be assumed by the buyer. The terms of a management deal have not been defined, but we can assume that an overseer/caretaker would not absorb debt. Santee Cooper is currently not paying down any of its debt; it is only servicing interest on the debt. Deferring a sale of Santee Cooper whether through a management contract or allowing the state-owned utility to continue ‘business as usual’ means rates will go up for direct and co-op customers,” he said.
“That percentage becomes higher if consumer behavior responds to rising rates with reduced demand, as is typical and expected,” he said. “That percentage becomes much higher if Central Electric Cooperative wins its lawsuit removing its member co-ops from any obligation for the nuclear debt, leaving Santee Cooper’s fewer than 200,000 residential, commercial and wholesale customers to foot the entire debt and interest.” Central Electric Cooperatives buys approximately 70 percent of the power produced buy Santee Cooper.
May noted other concerns about a Santee Cooper sale – the fate of Lake Marion and Lake Moultrie and Santee Cooper’s tax exempt status. He dismissed those concerns saying it makes good economic sense to maintain the lakes and that any sales contract could stipulate their maintenance.
And as a bonus, a privately owned utility would be paying taxes, he said.