COLUMBIA - South Carolina legislators emphasized Wednesday only the General Assembly can sell a state-owned utility, and it makes no sense to do so at a "fire sale price" following the abandonment of a multibillion-dollar nuclear power project.
Gov. Henry McMaster is negotiating with power companies to buy all or part of Santee Cooper. McMaster says he wants a buyer to either complete one or both of the partially built reactors or refund customers the billions they've sunk into the scuttled project.
In a joint letter to McMaster, the state's two most powerful legislators said that, while they appreciate the governor's efforts, any sale of Santee Cooper must be the "best and most fiscally responsible choice for South Carolina."
"We cannot allow this investment to be sold at a fire sale price if we firmly believe that is not in South Carolina's best interest," wrote House Speaker Jay Lucas and Senate President Pro Tem Hugh Leatherman.
Santee Cooper and investor-owned South Carolina Electric & Gas halted the project at V.C. Summer Nuclear Station north of Columbia after jointly spending nearly $10 billion on construction and charging customers more than $2 billion in interest fees on that debt through a series of rate hikes since 2009. Santee Cooper, one of the nation's largest public utilities, owns 45 percent of the project.
State law specifies any sale of Santee Cooper must be approved by the Legislature, which has previously balked at the idea. While the governor appoints all of the utility's board members, the Legislature stripped many of the governor's powers over the utility more than a decade ago when it appeared then-Gov. Mark Sanford was trying to selling it. His former chief of staff, state Sen. Tom Davis, maintains state government should not be in the utility business.
Others worry how selling to a private monopoly would affect Santee Cooper's customers and economic development. Santee Cooper is the source of electricity for more than 2 million people across South Carolina. Its direct customers include 26 large industries.
Santee Cooper's retiring CEO, Lonnie Carter, says any objective analysis would reveal selling the state-owned utility would drive up customers' costs. The public utility can sell tax-exempt bonds - a business model that lowers power costs, he said.
"In an investor-owned utility, investors invest in and they expect return," Carter said Wednesday. "Tax-exempt debt means we get a better interest rate. Our debt is cheap."
More than half of Santee Cooper's $8 billion debt is due to the defunct nuclear project. The debt represents 80 percent of the "book value" of the utility's assets, though actual worth depends on what a buyer's willing to pay, Carter said.
Lucas and Leatherman said no serious offers will be accepted until Santee Cooper's value is evaluated. They asked McMaster for any valuation studies his office holds and said the Legislature will hire an outside expert as well to do a separate study and evaluate any potential offers.
In response, McMaster said no independent evaluation has been done, but he'll share any information he gets.
"I agree completely with your points," he wrote. "I look forward to working together to solve this critical issue."
Senate Majority Leader Shane Massey said he's open to the idea of selling Santee Cooper - whether whole or pieces of it - but that depends on how any sale would impact customers.
"I don't want to screw over customers any more than they've already been screwed over," Massey said. "I just want to make sure we know and South Carolinians know the consequences."
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