Santee Cooper deep in debt, still spending millions on ecodevo projects

August 12, 2021

Investigative Reports

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By RICK BRUNDRETT

Santee Cooper’s electric customers are on the hook for billions in debt payments, but that hasn’t stopped the state-owned utility from spending millions in recent years on economic development projects.

The Nerve’s review of utility records provided recently under the state’s open-records law found that from May 2018 through May of this year, Santee Cooper approved a total of more than $28 million in economic development grants and no-interest loans. The beneficiaries included companies, county and municipal governments, and economic development groups.

The Nerve in 2019 initially revealed that the utility over the previous eight years had approved a total of at least $121 million in economic development spending. A Santee Cooper spokeswoman said then the utility’s board of directors sets parameters for the loan and grant programs, while management staff typically approve individual loans and grants.

The Berkeley County-based utility maintains that state law requires it to promote economic development within its service area. But the law also mandates that its board of directors act in the “best interests” of the utility, including providing electricity at “just and reasonable rates, regardless of the class of customer.”

Santee Cooper supplies electricity to about 2 million South Carolinians, generating power for the state’s 20 electric cooperatives in addition to directly serving more than 190,000 customers in Berkeley, Georgetown and Horry counties, according to its website.

As of June 30, Santee Cooper owed a total of $12.5 billion in debt payments, including interest, according to Santee Cooper spokeswoman Mollie Gore. Utility records provided to The Nerve in mid-June showed annual estimated debt payments for this year totaling $461.4 million, with an overall debt of $13 billion scheduled to be paid off by the end of 2056.

The current total debt includes $3.6 billion in bonds for the abandoned V.C. Summer nuclear construction project in Fairfield County, Gore said Wednesday in her written response, noting that about 5% of a current residential bill is “related to the nuclear debt.”

Asked if customers’ electric bills will increase to pay off the utility’s overall debt, and if so, when and by how much, Gore replied, “We are in a rate lock period through 2024,” adding, “Beyond that, our financial forecast shows stable prices for a number of additional years, thanks to our plans for managing debt (refinancing and defeasance), moving to a leaner, greener resource mix, and implementing additional cost savings.”

Santee Cooper was a partner with South Carolina Electric & Gas – now part of Virginia-based Dominion Energy – in the failed $9 billion V.C. Summer project, which abruptly ended in July 2017 when the utilities pulled out.

Lawmakers considered selling Santee Cooper in the wake of the fiasco, though they ultimately decided not to and instead passed a law this year that purportedly would reform the utility. The new law, however, didn’t lessen the power of a legislatively controlled committee, known as the State Regulation of Public Utilities Review Committee (PURC), which determines whether to qualify the governor’s appointees to Santee Cooper’s board of directors.

The Nerve in June revealed that two of the utility’s 12 board seats were vacant at the time, while seven members were serving past their terms. The full Senate later confirmed Peter McCoy of Charleston, a former U.S. attorney for South Carolina and ex-state House member, for the board chairman’s seat, which had been vacant.

Big spending

The Nerve’s latest review found that since October 2018, the utility approved six no-interest, economic-development loans totaling $14.8 million, including $5 million to the Laurens Electric Cooperative and $4 million to the “Marlboro Development Team,” described on its website as a “South Carolina based real estate developer.”

The utility’s records didn’t specify the intended purpose of the loans. Gore said the $5 million loan was used to help construct an industrial building at the Connexial Commerce Center in Laurens County, while the $4 million loan was used toward the construction of an industrial building in Newberry County.

In each case, interest will accrue after three years if the loan isn’t repaid by then, Gore said.

From November 2018 to October last year, seven “Site Readiness Fund” (SRF) grants totaling $7.9 million were awarded through the “South Carolina Power Team” – an economic development organization representing the state’s 20 electric cooperatives. The grants included $2.6 million for the development of about 500 acres at the Connexial industrial site in Laurens County, and $2 million for the purchase of 643 acres next to the Winding Woods Industrial Park near St. George, records show.

Seven other “municipal” SRF grants totaling nearly $3.8 million were approved in recent years, including $1 million to the city of Newberry for an unspecified project and $811,261 to the Myrtle Beach Regional Economic Development Corporation for site development at the Ascott Valley Industrial Park in Horry County.

In addition, utility records show that since October 2018, 34 “Santee Cooper Economic Development Investment Fund” (SCEDIF) grants totaling nearly $2.3 million were awarded or requested, including:

  • $500,000 in 2020 for Niagara Bottling, which, according to media reports, announced it would locate a $70 million plant in Florence County. Under that grant program, the Pee Dee Electric Cooperative had to match the award.
  • 23 grant requests totaling $422,170 to be used by electric cooperatives for, according to Santee Cooper’s website, “technical assistance such as feasibility studies, environmental assessments and land use plans.” The requests included $30,000 in 2019 for a “drone video” project involving the Tri-County Electric Cooperative, based in St. Matthews.
  • $400,000 in 2019 for “Project Kettle” in Berkeley County, which, according to media reports, was a proposed $300 million expansion project at Nucor Corp., a steel manufacturer.

Two of the three SCEDIF grant programs are “administered by the SC Power Team in consultation with Santee Cooper,” according to Santee Cooper’s website.

Since May 2018, Santee Cooper also has doled out 27 “Rural Economic Development” grants totaling nearly $232,000 to cities, towns, counties and economic development groups, records show. The grants are available for “durable projects, such as computer hardware and software and presentation materials, as well as training, scholarships, labor studies, lead generation and advertising,” according to the utility’s website.

The grants included $6,000 this year to the city of Clinton for an advertisement in a quarterly industry-development publication, and $10,000 in 2020 to the town of Moncks Corner – where Santee Cooper is headquartered – to hire a company to work with town officials on “developing marketing strategies for the town,” records show.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

 

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