$9.5 billion offer for Santee Cooper would pay off debt and settle lawsuit
Earlier this week, the state Department of Administration (DOA) released its long-anticipated report presenting three possible options for the future of Santee Cooper. Santee Cooper, known officially as the South Carolina Public Service Authority, is a state agency that operates as an electric utility.
The future of the utility became uncertain when Santee Cooper and its partner SCANA pulled the plug on the expansion of a nuclear plant in Fairfield County known as V.C. Summer. Nearly from the beginning, V.C. Summer was beset with massive cost overruns and poor management. Eventually, the contactor on the project, Toshiba, filed for bankruptcy.
SCANA was sold to Dominion and its ratepayers were partially compensated for the costs of the defunct nuclear plant. But Santee Cooper, as a state agency with no equity investors, had no source of cash for compensating its customers for their loss. So, last spring, the legislature asked DOA to come to them with three options: a worthy buyer, an able manager, and an internal reform plan from the agency itself.
NextEra was the winner of the Buy category, with an all-in package of $9.5 billion.
Dominion won the Management competition.
The facts of the DOA report are clearly in line with what our two years of research has shown. We said that a private utility would indeed offer top dollar for the utility and resolve the cloud of debt and litigation hanging over co-op and direct serve customers. We argued that given the chance, the market would speak. With its $9.5 billion proposal, the market indeed spoke, and spoke loudly.
NextEra’s offer includes $6.6 billion to pay off all of Santee Cooper’s debt from V.C. Summer and $941 million in rate cuts/refunds to customers. (NextEra has set $541 million of that $941 million to be used to settle the Jessica Cook et al. ratepayer lawsuit against Santee Cooper.) Another piece of the NextEra offer…At least a $515 million direct payment to the coffers of the state.
The bottom line is this: when the General Assembly gave private enterprise a chance, it rose to the occasion, offering solutions to many of the legal and financial problems Palmetto Promise documented in After the Iceberg: Which Lifeboat is Safe for Santee Cooper Ratepayers and South Carolina Taxpayers? (2020).
The ball is now in the legislature’s court. What will happen? We cannot predict. But know this, Palmetto Promise will continue to fight for ratepayers and taxpayers. Follow us on Twitter for the latest updates!