A little-known Santee Cooper customer holds tremendous power over the possible sale of the state-owned utility, S.C. state senators learned Wednesday.
If S.C. Gov. Henry McMaster gets the Legislature’s OK to sell Santee Cooper, Columbia-based Central Electric Power Cooperative could terminate its long-term contract to buy and distribute power from Santee Cooper to 20 electric cooperatives with more than 764,000 customers.
That agreement is one of Santee Cooper’s most valuable assets, an asset any buyer would want.
Central Electric also would have the option to step in and buy another asset any Santee Cooper purchaser would want – at least 60 percent of the utility’s power generation and transmission assets, outgoing Santee Cooper chief executive Lonnie Carter told a Senate committee Wednesday.
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Central Electric’s contractual power is just one of the potential roadblocks to selling the Moncks Corner-based utility, Carter told senators.
Any deal also would have to account for Santee Cooper’s other contracts and licenses, its employees’ state pensions and its $8 billion in debt – half stemming from its failed effort to build two new nuclear reactors at the V.C. Summer Nuclear Station.
“It’s a big, complicated operation,” said Carter, who has said the utility’s sale would hurt customers by increasing their power rates. “But it can be done.”
McMaster has sought to sell the utility since August, shortly after Santee Cooper and Cayce-based SCANA pulled the plug on a nine-year, $9 billion nuclear expansion project in Fairfield County.
Santee Cooper’s customers face eventual rate hikes totaling $3.4 billion to pay for the scuttled project. McMaster hopes to come up with that money by selling the utility to one of four unidentified Fortune 500 utilities, three of which are thought to be Charlotte-based Duke Energy, Richmond-based Dominion Energy and Atlanta-based Southern Co.
Those talks have heated up lately.
One company recently submitted a bid for Santee Cooper, and three more offers are expected soon, the governor’s office has told The State.
In response, a state Senate committee Tuesday questioned Carter about Santee Cooper’s assets, its operations and the possible impact of its sale. They asked about everything from Santee Cooper’s lakes to its recreation center, power plants and employee pension plans.
Some, including state Sen. Brad Hutto, D-Orangeburg, prefaced their questions by suggesting selling Santee Cooper would be nearly impossible.
“I’m not sold on that (selling) yet,” state Sen. John Scott, D-Richland agreed.
Senators were surprised to learn Santee Cooper’s largest customer – electric cooperatives, who buy power from Santee Cooper through Central Electric – have so much sway over any deal.
Mike Couick, chief executive of the Electric Cooperatives of South Carolina, said that power stems from Central Electric’s payment of 70 percent of Santee Cooper’s capital costs as part of its contract to buy electricity from the utility until 2058.
“Because we’re on the hook ... we’re given extraordinary rights to make sure our members’ electric service remains reliable and affordable,” he said.
Senators left Wednesday’s hearing wondering whether the utility should be sold.
They want to know how much Santee Cooper is worth, as well as how selling the publicly owned company to a for-profit utility might affect its customers, who now enjoy relatively low power bills.
Those bills, however, eventually will rise, even if Santee Cooper is not sold. After a two-year rate freeze, Santee Cooper must start charging its customers $3.4 billion more to cover money that it sunk into the failed V.C. Summer project, Carter has said.
Carter said Wednesday that he could not say how high rates would go.
“We really need to focus ... on what the impact would be on customers,” said Senate Majority Leader Shane Massey, R-Edgefield. “I don’t want to screw over customers any more than they’ve already been screwed over.”