Image Source: Post and Courier
South Carolina’s Senate Finance Committee Chairman Hugh Leatherman is demanding Santee Cooper pay the state $15 million for the consultants being used to facilitate the sale of the state-owned entity.
Included in H. 4287, the legislation that established a procedure for determining the future of the state-owned utility, is language that requires Santee Cooper to “provide any and all the resources necessary to assist in the process for competitive bids and management proposals, as well as the evaluation of the bids and management proposals received by the department.” According to Leatherman, this requires Santee Cooper to pay for the necessary consulting fees for this process.
On July 5, 2019, Former Interim-CEO Jim Brogdon sent a letter challenging Leatherman’s demand, saying the language of the written plan to field offers on the future of Santee Cooper did not include the $15 million for consulting fees. Brogdon also said if Santee Cooper were to pay the $15 million, the agency will subtract from the $17 million Santee Cooper already gives to the state each year.
There are 20 electric co-ops that purchase three-fifths of Santee Cooper’s power and distribute it to all 46 of South Carolina’s counties. These co-ops recently stated that it is “reasonable and necessary” for a multi-billion dollar transaction to take place. The co-ops, which pay nearly 70 percent of Santee Cooper’s costs, are comfortable with their $10 million dollar share according to Rober Hochstetler, CEO of Central Electric Cooperative, which buys power on behalf of the 20 co-ops. He went on to say, “We realize that experienced and qualified investment bankers are expensive, but we are convinced they are necessary for a successful process that will produce the best result for the state.”
In 19 of the last 20 cases where U.S. utilities were purchased over the last six years, both the buyer and seller hired private investment banks for consultation on these large transactions. The one case without outside consultants occurred when Berkshire Hathaway purchased Nevada-based NV Energy. In this unique scenario, Berkshire Hathaway had qualified consultants in-house, so there was no need to hire outside help for the transaction.
Highly experienced and qualified consultants are necessary in order for a realistic solution to the failed V.C. Summer project and the $7 billion of debt that is currently burdening ratepayers. Santee Cooper’s refusal to pay the $15 million it owes the state for these consultants and consulting fees poses another barrier in the path for a solution to the problem.
Santee Cooper’s direct serve and co-op customers deserve a timely solution that doesn’t involve rate increases, considering they should not be held responsible for problems caused by poor decision making. Especially during a time when the new Santee Cooper CEO, Mark Bonsall, is making double the salary of former CEO, Lonnie Carter. All while Carter is still receiving $800,000 a year from the company in annual retirement pay.