Throwback Thursday: How NOT to sell Santee Cooper

February 20, 2020

Inside Insight

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Santee Cooper

Lawmakers have been holding committee meetings all week on the S.C. Department of Administration’s report detailing three different proposals for the future of state-owned utility Santee Cooper: a purchase offer from NextEra, a management offer from Dominion, and an internal reform proposal from Santee Cooper itself.

There are serious problems with all three proposals – an outcome to be expected, as lawmakers started off with the wrong approach.

For one thing, the wrong people were in charge. The process of soliciting bids and offers for Santee Cooper should have been carried out by the Santee Cooper Advisory Board, which is comprised of five state constitutional officers: the governor, attorney general, treasurer, comptroller general and secretary of state. All of these officials answer directly to the public. Instead, lawmakers bypassed the governor, suspended the state’s procurement laws, and handed specific instructions for the bid process to a team of bureaucrats and third-party consultants who are not accountable to the public.

Another problem with the current proposals is that the public has been kept entirely in the dark. The bid process was carried out behind closed doors, and only select information has been disclosed. The other Santee Cooper bids and proposals are being deliberately withheld from the public, giving taxpayers and ratepayers no way to evaluate whether the recommended proposals actually are the best offers.

And there is no way to verify that all applicable state and federal laws were followed in preparing the proposals. For example, four financial entities signed nondisclosure agreements to gain access to Santee Cooper’s finances. As long as the identities of those institutions remain secret, the public has no way of knowing whether any of them are Santee Cooper bondholders, which could raise questions of improper access to certain information.

Finally, the biggest problem with Santee Cooper is its massive debt load, much of which resulted from the failed V.C. Summer nuclear construction project. None of the three proposals makes that debt go away – nor is that the goal. The NextEra purchase bid, for example, would finance the debt payments with new debt paid for by ratepayers, along with a lot of new construction costs. In reality, there is no way to make Santee Cooper’s $7 billion in debt magically disappear. At the end of the day, it will fall to the ratepayers regardless of the approach.

The only way to arrive at a real solution for Santee Cooper is to start with a transparent process where decision makers can be held directly accountable, and aim for an honest goal that actually is achievable – such as getting state government out of the business of producing power, and eliminating barriers to consumers’ ability to choose their own power company.

Selling Santee Cooper: First Things First

Two committees comprised almost entirely of lawmakers are currently exploring the possibility of selling state-owned utility Santee Cooper. Not only is this beyond the proper jurisdiction of legislators – whose job is simply to establish laws – but their approach is leaving citizens in the dark.

Santee Cooper is the property of the taxpayers, not the government, and any exploration of a sale must be conducted in a fully transparent, accountable process.

Who should sell Santee Cooper?

If Santee Cooper were a private corporation rather than a state agency, its board of directors would (hypothetically) negotiate the sale. In this case, however, state law prohibits the board from even exploring a sale without a vote by lawmakers. More importantly, Santee Cooper’s board showed itself incapable of proper management and oversight throughout the V.C. Summer nuclear fiasco, which resulted in billions of debt owed by ratepayers.

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