This article was originally published by the Greenville News on May 27, 2018.
A recent economic analysis released by Palmetto Promise Institute revealed that future utility bills from Santee Cooper – South Carolina’s state-owned utility – must increase anywhere from $166.99 to upwards of $751.03 a year per residential customer for the next 38 years. This is on top of the 15 percent rate hike customers have already endured since 2012.
Why? Because of the billions in debt created by the failed VC Summer nuclear debacle.
But because many of us in the Upstate rely on Duke Energy for our electricity, this issue may not seem alarming. While it is true that Upstate energy consumers appear to be buffered from the poor decisions of Santee Cooper and SCE&G parent company SCANA, we must remember that while SCANA is investor-owned and has stakeholders and a corporate structure that can absorb some of the debt, Santee Cooper is owned by every taxpayer in South Carolina.
Which is why steps must be taken to mitigate potential damage to all South Carolinians from the Santee Cooper fallout. But to properly plan for the future, we must review how we got here in the first place.
Santee Cooper began in the 1930s as part of President Franklin Roosevelt’s New Deal, with a focus on rural areas. Santee Cooper is unlike any other utility in the state, and likely the country, in that it is wholly state-owned and run by a group of politically appointed individuals. Unlike other utilities, Santee Cooper has no oversight from the Public Service Commission or the Office of Regulatory Staff. In 2005, the legislature went as far as revoking the governor’s ability to remove appointees except in criminal or conflict of interest cases.
In 2008. Santee Cooper joined with SCANA-owned SCE&G on a $10 billion project to build two nuclear reactors at a site called V.C. Summer. Over the course of the project, costs soared to more than $20 billion. Santee Cooper had unilateral power to raise consumers’ rates to pay for this project, something they did four times in the nine years the utility was involved with the V.C. Summer project.
Finally, in 2017 as costs continued to balloon, Santee Cooper pulled the plug with $4.4 billion in the hole. Ratepayers are Santee Cooper’s only source of revenue and, as of now, the losses are on their backs. While that’s certainly untenable for those individuals, kicking the can down the road and doing nothing could have significantly negative impacts on the Upstate as well.
Less than two years ago, 62 percent of Santee Cooper’s revenue came from South Carolina’s electric co-op customers. These co-ops operate in all 46 counties in South Carolina which means the losses will hit statewide. It is also worth remembering that any state action that shifts the debt burden onto the state – similar to when the state bailed out a public university recently – would pass the tab along to all South Carolina taxpayers. Any way you look at it, we’re all impacted by how the resolution to this debacle is – or isn’t – handled.
Industrial customers, many of whom get their electricity from co-ops statewide, would likely have their bills increased by $80,000 a month. If the status quo continues, Santee Cooper’s customers will be paying off the more than $4 billion V.C. Summer debt, plus billions in interest, for the next 38 years.
Saddling ratepayers with this debt would be nearly criminal. Many Santee Cooper customers are already on tight budgets and could be forced to choose food over lighting or risk their health over heat or air conditioning. A House committee even received testimony from one rural ratepayer who was forced to bathe with baby wipes because she couldn’t afford the electric bill for her water heater.
The South Carolina General Assembly has the final authority to determine Santee Cooper’s future. In the last few weeks, both the House and the Senate have voted to create a fact-finding committee to get independent, expert valuation of Santee Cooper’s assets and establish a fair and transparent process to vet potential sale offers.
This is an absolutely critical first step to protect ratepayers and taxpayers. However, this committee is not yet a done deal. Creation of a study committee is in the Senate version of the budget as a proviso, but the House conferees must agree to include it in the appropriations bill. We hope that occurs. It is urgent that this process move forward.
All South Carolinians, including those of us in the Upstate, will be impacted by the Santee Cooper situation. While we would like to see South Carolina to get out of the state-owned utility business altogether, that decision will have major implications on real lives and can’t be made in the absence of independent, expert analysis.
The longer we delay getting the facts we need to make an informed decision to deal with Santee Cooper’s massive debt, the worse this nearly $9 billion catastrophe will be for everyone. It’s past time we got started.