State-Owned Utility Offers Economic Incentives to Industries

September 20, 2012

Investigative Reports

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Santee CooperA nonprofit group formed between state-owned Santee Cooper and 20 electric cooperatives served by the utility hopes to grow South Carolina’s industrial base by offering rate discounts to new or expanding companies.

The “South Carolina Power Team” also has given tens of thousands of dollars to county economic development agencies with ties to local government agencies for economic development projects in those areas, federal tax records show.

The rate discounts, which were first announced in February, could save eligible industries as much as 20 percent on their electric bills.

Meanwhile, Santee Cooper’s Board of Directors last week approved rate hikes averaging 3.5 percent each year for two years for its residential, commercial, industrial and municipal customers.

“I know times remain tough for many of our customers,” Santee Cooper Chairman O. L. Thompson said in a press release. “The fact is Santee Cooper has already cut $1. 8 billion in capital expenses and approved other cost-saving measures the past two years.

“We are now at a point where we must increase revenues to ensure we can fulfill our statutory requirements to recover our costs, meet new environmental regulations and build generation that is important to South Carolina’s future.”

Santee Cooper spokeswoman Laura Varn told The Nerve in a written response that the rate hikes and reduced-rate offer to new and expanding industries were not connected.

Despite being state-owned, Santee Cooper, based in Moncks Corner, doesn’t “get a dime of taxpayers’ money,” but instead earns its income from its customers, Varn said. The electric and water utility, which touts itself on its website as the “state’s largest power producer,” provides power to 20 independent, member-owned electric cooperatives, which collectively serve more than 700,000 customers in the state’s 46 counties.

Santee Cooper also directly serves 29 industrial customers in 10 counties, as well as the town of Bamberg, city of Georgetown and Charleston Air Force Base; in total, the utility provides power to more than 2 million South Caroinians, according to its website.

In June, Santee Cooper’s board of directors approved a loan program to local governments and nonprofit economic development organizations in Santee Cooper’s direct-service territory, and to all wholesale customers (excluding electric cooperatives served by the utility), aimed at the creation of industrial parks and industrial buildings.

The separate South Carolina Power Team, comprised of Santee Cooper and the 20 cooperatives, is offering reduced electric rates to eligible industries contingent upon “an eight-year commitment, workforce and capital investment requirements, and a four-year discount period,” according to a press release.

“Both Santee Cooper and the 20 co-ops can offer them to new and expanding industries,” Varn told The Nerve. “Some industries are in Santee Cooper’s territory, so we can offer it, and some industries are in co-op territory, so they can offer it.”

Asked whether these incentives have produced results, Ralph Thomas, South Carolina Power Team’s president and CEO, told The Nerve, “It’s a little too early to ascertain the results of that.”

In 2010, the Power Team – also known as the Palmetto Economic Development Corp. – awarded grants totaling more than $40,000 to economic development organizations with ties to local government agencies in Clarendon, Colleton and Laurens counties, according to the organization’s federal tax return for that year.

The grants were for “site certification,” according to the tax return,

“Santee Cooper also has its own economic development department,” Varn said when asked why grants were awarded to specific groups. “So we work with the Power Team and also do our own ED (economic development) efforts. The ED loans that were approved by our board recently were for shell buildings in conjunction with the respective counties.”

“We work with county and regional economic development,” Thomas told The Nerve. “What we try to do is support these counties in their efforts to attract industry to their area.”

Thomas said the S. C. Department of Commerce began a program supporting the certification of South Carolina industrial sites, confirming their “shovel-readiness” for an industrial location, adding, “We came along after them and said, ‘This is a good idea.’”

“Site certification is a type of assistance we offer, and we’re happy to do it,” Thomas said.

“The bottom line,” he continued, “is this: It’s all about recruiting companies to South Carolina and creating jobs, payroll and capital investment.”

Although the reduced utility rates announced in February have not yet “landed us any customers,” the Power Team has been successful with certifying sites, Thomas said. Of the 50 or 60 certified sites in South Carolina, 12 are occupied by facilities outside of South Carolina, he said, adding that the Power Team provides service to seven of those sites.

“These companies have made millions of dollars in capital investments and have created hundreds of jobs,” he said. “The amount of money that we’ve spent certifying these sites is very insignificant compared to the amount made by these companies.”

Thomas also has done well as head of the Power Team: In 2010, he earned $312,459 in salary and benefits, according to the organization’s federal tax return.

The document also pointed out that there were “certain employees with memberships at the Capital City Club and Columbia Country Club … primarily for business purposes.”

Thomas said he is the only employee with a country club membership.

Reach Weston at (803) 254-4411 or kelli@thenerve.org.

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