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santee cooper sale

News

Santee Cooper Extends Executive Contracts And Sponsors Golf Tournament Amid Financial Disaster

Featured Image: The State

As debt continues to pile up for Santee Cooper, lawmakers still remain halted at their decision for the future of the state-owned utility company. After lawmakers were forced to take a break earlier this year due to COVID-19, the utility’s fate will linger even longer. 

With the decision to sell still on the table, Santee Cooper in an attempt to continue reform plans is spending more ratepayer money on extending high-paying contracts to executives and on golf tournament sponsorships. 

The company recently announced that they will be extending contracts to Mark Bonsall, the CEO, and Charles Duckworth, the deputy CEO who were both brought on last year after former CEO, Lonnie Carter retired from the company when the utility’s debt began making headlines. Carter left with an initial payout and an annual retirement salary of $800,000 for 20 years, that Santee Cooper customers are still paying for. 

Last year we reported that Bonsall was guaranteed $1.1 million over the next 18 months in addition to bonuses, exceeding Carter’s previous salary of $541,000, while Duckworth made a reported $560,000 annual salary. All of which the utility’s direct service and electric cooperative customers pay for, and it doesn’t look like it’ll be changing anytime soon. The two will remain with the company until July 2021 and will continue to oversee all political and legal challenges. Bonsall and Duckworth will even have the opportunity to earn bonuses, pending their performance. 

Lawmakers have been debating the future of the company for the past three years since it undertook $4 billion in debt from the failed V.C. Summer project. Because of this, Santee Cooper has been under scrutiny with where they spend their money since the company’s debt is nearly $7 billion, has no Public Service Commission Oversight and its ratepayers are the only ones responsible for past bad financial decisions. Many, therefore, are not happy that the state-owned company decided to sponsor the Heritage Golf Tournament for yet another year. The tournament which was played 2 months later due to the coronavirus pandemic and without fans, was a large investment. This large expenditure is seen as unnecessary by many and has resulted in another level of concern with taxpayers and ratepayers.

As customers are left holding the bill for the interim and Santee Cooper fails to acknowledge the long term burden on them, they also fail to stop spending large sums of money that will only add to the already existing and growing debt. For some, a sale of the public utility “dinosaur” cannot come soon enough.

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Legislative Action Required for Santee Cooper. Here’s Why:

Santee Cooper surprised Governor McMaster’s office and lawmakers when they announced their new business forecast early last month. The forecast involves phasing out coal plants, transitioning towards solar and natural gas power and a five-year rate freeze for customers. While parts of the forecast are positive, such as a transition to solar and natural gas, it leaves many questions unanswered, with concern over the company’s $7 billion debt still looming for the millions of customers that receive power from the utility.

An editorial recently published in the Post and Courier breaks down the realities of the forecast and explains that legislative action is required for Santee Cooper to actually reform. The editorial states, “If Santee Cooper is serious about turning over a new leaf, then the reform proposal it submits needs to include more than Mr. Bonsall’s business plan. It needs to include an actual reform plan, one with proposed legislation to make all of those changes he supports.”

In Santee Cooper’s current structure, the governor cannot remove individual directors unless they break the law or commit one of the listed offenses, meaning board members cannot be removed for poor decisions or hiding information from cooperatives and state regulators. The board can also raise rates with no approval or oversight from the South Carolina Public Oversight Service Commission, unlike other privately owned utilities in the state.

The editorial concludes by emphasizing that nothing laid out in the proposed business forecast would stop Santee Cooper from reverting back to its systematic and cultural problems that led the utility to the billions of debt it currently faces and the other bad decisions in its past.

“In fact, in assessing the proposals, legislators should consider the possibility that if the utility manages to stop a potential sale, it could go back to its old ways.”

Without legislative action, these initiatives could easily be reversed if lawmakers decide not to sell the state-owned utility. For example, Santee Cooper’s new CEO, Mark Bonsall, told the Post and Courier’s editorial staff that he opposes letting the PSC set rates, but would support a law requiring customer input before raising rates.

The General Assembly is expected to be presented bids for the potential sale of Santee Cooper as early as January 15. It is essential that all proposals are assessed thoroughly and expeditiously to ensure the millions of customers are given the best option for the future of the utility and the future of their rates.

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Santee Cooper Intervenes As The City of Goose Creek Seeks To Purchase Power On the Open Market for Much Less

Featured Image: ABC News 4

Goose Creek is exploring the idea of creating a municipal electric utility to serve areas annexed into the city. A driving factor in the decision is Century Aluminum which is located right outside of Goose Creek city limits where high costs of power are threatening the company.

Century Aluminum currently purchases 75% of its power on the open market and the remaining 25% from Santee Cooper. According to a Count on News 2 report, the power the company purchases from Santee Cooper is almost double the cost compared to that purchased on the open market. Due to the high power costs, Century Aluminum had to close half of the facility’s operations in 2015.

The high costs of power and the problems they created within Goose Creek led to City Council discussions regarding the creation of their own utility which would buy power on the open market at half the cost of the power purchased from Santee Cooper. The utility would serve the nearly 5-thousand acres owned by Century Aluminum annexed into Goose Creek including the company’s smelter site and an undeveloped part of an industrial park.

On September 10, Goose Creek City Council approved a referendum to ask voters if they want to begin operating an electric utility to serve Century Aluminium and to approve the annexation of the 5,000 acres of Century property. If approved, the company would pay the city property taxes and a business license fee. City Council members believe this is a great opportunity to bring in large amounts of revenue for the city.

Santee Cooper officials responded swiftly making the claim that what is being proposed by Goose Creek is illegal, citing a similar 2004 annexation case involving South Carolina Electric & Gas vs. the Town of Awendaw.

Another issue arises with the fact that Santee Cooper owns all of the substation and transmission lines at the property. Santee Cooper’s next steps are still unknown, but it is clear the state-owned utility doesn’t want Goose Creek purchasing its power on the open market for nearly half the price.

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Santee Cooper Announces Its New Plan, Leaving Many To Wonder What It Actually Means For Their Rates

Featured Image: Energy Manager Today

After making a surprise announcement that they would be unveiling elements of their reform plan to the public, state-owned Santee Cooper revealed the details this past Monday.

The plan, centered around the utilities’ move from coal to solar power and gas-fired plants, also lays out a business forecast for the debt-ridden utility. In July, Santee Cooper brought on its highly-paid CEO, Mark Bonsall, who led the transition from coal to solar at an Arizona utility company before heading to South Carolina. And news last month previously stated Santee Cooper would be phasing out coal generation and shutting half of its coal plants down. Leaving open the question – what will happen to all the employees that work at these plants?

According to the plan, the percentage of energy generated by coal will decrease to around 30 percent from the current level of 52 percent by 2033. To accomplish this, Santee Cooper will phase out its Winyah Generating Station, add utility-scale solar power while also buying smaller natural gas-fired turbines, all of which will take considerable time and resources to accomplish.

The initial plan involved a cost-sharing agreement to fund this shift with Georgia based, Southern Co., but after major backlash from lawmakers, the Governor’s office and South Carolina residents, this part of the plan was abandoned.

The board was intending to vote on the agreement with the investor-owned utility Monday, but the deal was shut down after state Department of Administration Director Marcia Adams, sent a letter on August 29 nixing the agreement and even threatening a restraining order to shut down the deal if necessary. Adams explained that entering into an agreement “with one more investor-owned utilities that include terms and arrangements that would potentially subvert the process set fort in the joint resolution.”

On September 2nd, S.C. Senate Finance Committee Chairman Hugh Leatherman, widely considered the most powerful legislator in the state, strongly opposed any such agreement and sent a letter requesting Santee Cooper not enter into any agreement that would limit the General Assembly’s options. Senator Leatherman ended the letter with, “in my opinion, such actions would be grounds for board removal if the governor so chooses.” Legislators, state officials and even the co-ops argued that the arrangement would have undermined and hindered the state’s process for assessing the bids for Santee Cooper.

While a plan roll-out from the state-owned utility was expected in the context of a reform deal to be submitted to the Department of Administration and evaluated alongside the management and sale bids, this announcement leaves many South Carolina residents and Santee Cooper customers wondering, what does it even mean?

The transition to renewable and cleaner energy is the future of the energy business without a doubt but Santee Cooper outlined no way to pay for this transition or how it will alleviate customers from rate increases to pay off the $4 billion of debt from the failed V.C. Summer project.

Bonsall pointed out that Santee Cooper plans to pay off $500 million of the debt by next year without explaining how they plan to do so, and still leaving billions unpaid, left to fall onto over 2 million South Carolinians who purchase power from the state-owned utility directly or from one of the 20 Electric Co-ops.

According to The State, Bonsall said Santee Cooper is still interested in partnering with other utilities in order to pay for these transitions even though legislators, government officials and the coops believe this will undermine the plan for the General Assembly to assess bids for the state-owned utility.

So, the question still remains, what will happen to Santee Cooper and its billions of dollars of debt?

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Santee Cooper’s Largest Customer Urges They Were Powerless Throughout the V.C. Summer Project

Santee Cooper’s largest customer, the electrical coops that buy three-fifths of Santee Cooper’s power which gets distributed to their customers across the state of South Carolina, is suing the state-owned utility. While the coops are by far the agency’s largest customer, a 38-page claim filed in August works to show that Santee Cooper actively kept the problems of the V.C. Summer construction hidden from the coops.

The project left Santee Cooper billions of dollars in debt. To pay off this debt, the burden falls onto both the state-owned utilities’ direct serve and co-op customers. The 20 co-ops who purchase power from the utility are suing to stop Santee Cooper from charging their customers any more for the debt.

The coops attorney in the case explained, “The emails, letters, etc.described above tell the indisputable story of a project beset almost from the beginning with myriad fundamental, entrenched problems that led inexorably to major delays and cost overruns,” the co-ops’ attorney, Frank Ellerbe, wrote in the filing. “Yet, it was a story Santee Cooper kept largely to itself.”

The coops claim to be powerless throughout the construction process of the nuclear reactors and in turn, should not be held responsible for the debt Santee Cooper faces for their failures. While success for the coops will save millions of customers from having to pay off the debt, there are still a lot of questions left unanswered.

If Santee Cooper is blocked from increasing the coop rates, what will happen to the debt and how will it be paid?

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Santee Cooper residents thoughts

Charleston Resident Speaks Out About Santee Cooper

Once a valuable asset for the state of South Carolina, Santee Cooper is now nearing insolvency, especially if the company loses the fight with its largest customer, the electrical cooperatives.

The coops which purchase service from the state-owned agency, are suing Santee Cooper to stop the agency from continuing to charge their customers to pay for the more than $4 billion of debt due to the failed V.C. Summer project.

Santee Cooper’s questionable history has led to an outcry from South Carolina residents demanding change. One Charleston resident took to the Post and Courier to speak out on the cultural and systemic problems which have plagued Santee Cooper saying, “Paradoxically, Santee Cooper has failed to deliver more public benefits than its private sector, investor-owned companions.” While the state-owned utility frequently boasts having some of the lowest utility rates in the state, Santee Cooper actually has the second-highest utility rates, above privately-owned Duke Energy.

Unlike investor-owned Duke Energy, the Public Service Commission doesn’t have to approve rate increases for Santee Cooper since it is state-owned. Instead, it only takes a simple vote by Santee Cooper’s board of directors to raise rates on customers. And customers see the lack of concern Santee Cooper has for its customers by continuing to make decisions that aren’t beneficial for its customers. The Charleston resident put it best in their letter to the Post and Courier stating “it (Santee Cooper) has resisted almost every initiative that would provide even modest protections for the environment and public health, or that would help customers reduce power bills.”

In 2009, Santee Cooper spent a quarter-billion dollars on land, equipment, and parts before receiving federal or state permits to build a coal-fired plant in the Pee Dee. The plant then became just another one of Santee Cooper’s abandoned projects.

However, abandoning projects isn’t the only reason Santee Cooper has continued to raise rates on its customers. The state-owned utility also spent $2 million on a new CEO and deputy CEO team, granted several loans even while in debt, and as the Charleston resident pointed out in their letter, repeatedly violated the federal Clean Air Act regardless of monetary fines. “On the modest side of those miscalculations is the $2 million civil penalty Santee Cooper paid for repeatedly violating the federal Clean Air Act.”

Just last week, the Department of Administration announced it would begin inviting parties to submit bids for Santee Cooper. Direct serve and coop customers await the outcome of not only the state lawmaker’s decision on what to do with the debt-riddled agency but the court’s decision in the case between Santee Cooper and the coops.

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Department of Administration Announces Parties are Now Able to Submit Bids for Santee Cooper

The state Department of Administration recently selected four firms to explore options on the table for the debt-riddled, state-owned utility Santee Cooper. The firms, tasked with reviewing purchase and management offers and a reform proposal from Santee Cooper, will advise lawmakers as they work to decide the future of the utility.

On Friday, August 16, the Department of Administration took a step in the right direction and announced it is now inviting parties to submit bids for Santee Cooper. Moelis & Company, a New York-based investment firm, will advise the Department of Administration on the bids for Santee Cooper. The invitation can be viewed here.

On the same day, Santee Cooper approved a $5 million loan to Laurens Electric Cooperative through the economic development revolving loan program. This loan approval took place during an ongoing lawsuit between Santee Cooper and the co-ops over who is responsible to pay for the debt resulting from the failed V.C. Summer project continues.

The co-ops are suing to block Santee Cooper from charging its customers any more to pay off the $4+ billion of debt. The lawsuit would stop Santee Cooper from continuing to bill customers for the debt. Circuit Court Judge John Hayes ruled that the lawsuit would be allowed to continue on Friday.

In a 38-page claim, filed on Aug. 9, the co-ops presented a legal argument to show Santee Cooper actively kept information from its customers including construction setbacks and increased costs, in turn violating the contract and an attempt to make customers pay for a power plant that never produced electricity.

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Santee Cooper timeline

How We Got Here: A Santee Cooper V.C. Summer Nuclear Disaster Timeline

The largest financial disaster in South Carolina history didn’t happen overnight.

May 2008 – The start of this fiasco. SCE&G and Santee Cooper announced a nuclear expansion project at the VC Summer plant. Since the announcement of the VC Summer Project eleven years ago, several delays and massive problems were hidden by the project’s leadership.

There are several key dates before the most recent decision to explore the sale, but we’re focusing on the monumental dates that reveal SCE&G and Santee Cooper’s poor leadership, lack of transparency, and what led customers to be responsible for Santee Cooper’s $8 billion debt.

February 2009 – The nuclear expansion plan is approved and construction is set to begin in 2012 with the first reactor to begin operating in 2016 and the second in 2019.

November 2009 – Santee Cooper approves and implements a 3.4% rate increase to help pay for the project.

December 2011 – The project gets off to a rocky start with the first delay being reported by SCE&G for production issues, manpower issues, and the need to redesign nuclear modules.

December 2012 – Santee Cooper approves and implements another 1.8% increase to rates.

June 2013 – Another delay follows pushing the first reactor operation date to late 2017-early 2018.

December 2013 – Santee Cooper approves and implements yet another rate increase. This time a whopping 5.2% to help pay for the struggling project.

May 2014 – Obvious signs of trouble appear and Santee Cooper asks to hire an outside company to oversee the project.

October 2014 – Money trouble becomes more apparent when contractors say it will cost an additional one billion dollars to complete the reactors.

October 2015 – Westinghouse is brought on board and completion dates are rescheduled yet again. The project is now pushed back to late 2019-early 2020.

December 2015 – During this time, SCE&G asked the Public Service Commission of the Office of Regulatory Staff to increase rates to help fund the project. Santee Cooper has its own board of directors and doesn’t have to get rate hikes approved by anyone except its own board, so Santee Cooper increases rates to help fund the project.

April 2016 – Another rate increase is approved and implemented by Santee Cooper. Customers see their rates go up by 5.3% this time.

June 2016 – SCE&G asks for its ninth rate increase.

March 2017 – Westinghouse files for bankruptcy. The company cites $9 billion in losses from its two nuclear construction projects, one of which is the VC Summer project.

April 2017 – Santee Cooper increases rates another 2.1%.

July 2017 – Shortly after this, Santee Cooper and SCE&G announced they were abandoning the project even though customers have already paid up to $2 billion for the reactors.

At this point, much of the general public was still unaware of the financial effects it was having on them.

August 2017 – A special South Carolina Senate committee holds their first of MANY hearings and former Santee Cooper CEO Lonnie Carter announces his retirement.

September 2017 – A month later Santee Cooper turns over the Betchel report detailing their insufficient oversight of the project.

January 2018 – SCE&G customers hear good news when Dominion Energy announces it will purchase SCANA Corp.

June 2018 – A state audit reports that the final amount for the failed project could increase by over $400 million.

August 2018 – A 15 percent rate cut and refund for April-July charges begin appearing on SCE&G bills. Meanwhile, Santee Cooper customers are still continuing to pay for the failed nuclear disaster.

March 2019 – Santee Cooper executives are unable to answer important questions about the future of Santee Cooper and rates during a Senate hearing. Following this, South Carolina Senate President Harvey Peeler introduces legislation that calls for exploring options for a possible Santee Cooper sale.

April 2019 – Santee Cooper announces rate increases totaling about 7% between 2021-2024 with no PSC oversight.

May 2019 – Lawmakers adopt this resolution and will begin exploring options to sell Santee Cooper. Read more about what this resolution means, here.

July 2019 – The two-year anniversary of the abandonment of the failed V.C. Summer project that started back in 2008, over a decade ago, yet Santee Cooper direct serve and electric co-op customers are still paying for this massive financial disaster.

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