Santee Cooper

After Three Years There’s Still No Solution For Santee Cooper Customers

The largest financial disaster in South Carolina history didn’t happen overnight. In fact, it’s been going on for 16 years, since Santee Cooper and SCE&G announced they’d be partnering on a nuclear expansion project at the VC Summer plant in 2008.

After numerous delays and the project incurring billions of dollars of debt, the project was never finished and abandoned by both SCE&G and Santee Cooper.

It later came to light that executives fought to disclose a report highlighting serious problems with the project while continuing to pour money into it.

Three years later and with billions of dollars of debt that customers will have to pay, lawmakers are looking at selling the state-owned agency to alleviate customers of Santee Cooper’s debt. And while it looked like the financial disaster might come to an end earlier this year, a few lawmakers stalled. No decision was made, leaving Santee Cooper to continue to make poor decisions, such as extending a million-dollar contract for its CEO and sponsoring a golf tournament. Santee Cooper’s behavior was so bad it drew a harshly worded rebuke from the Speaker of the South Carolina legislature, who labeled Santee Cooper a “rogue entity” for providing “false and misleading” information.

So how did we get here? Here’s a timeline of how customers were left with billions of dollars of debt and increasing utility rates.

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.

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.

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.

Santee Cooper brings on new CEO, Mark Bonsall, guaranteeing him an annual salary of $1.1 million for 18 months.

August 2019 – The South Carolina Department of Administration announces parties are now able to submit bids for Santee Cooper hoping to alleviate customers from the increasing debt.

September 2019 – Santee Cooper’s largest customer, the electrical cooperatives which buy its power from the state-owned utility, sue Santee Cooper for keeping them in the dark about the failing VC Summer project, trying to protect their customers from being held responsible for its debt.

Santee Cooper also releases their “new plan” which fails to recognize its debt or explain what will happen to utility rates.

November 2019 – Increasing its debt even more, Santee Cooper’s legal fees for current and former executives surpasses $1 million.

February 2020 – Santee Cooper files a motion to stop any reference to future rate hikes during the cooperative lawsuit trial, hoping to keep jury members in the dark after claiming a “rate freeze” would be put in place.

The Department of Administration hands over a report to lawmakers detailing its recommendations from the bids it received from Santee Cooper including a management proposal from Dominion, a purchase proposal from NextEra, and a reform proposal from Santee Cooper itself.

March 2020 – House members vote to further negotiate with NextEra and discuss extensive reforms to Santee Cooper, rejecting Dominion’s management proposal altogether. While Senate members voted to give more time to Santee Cooper to reform disregarding the years it had to reform up until this point.

April 2020 – Pro-Santee Cooper Senators hold up emergency COVID funding until they win concessions to put off a decision on the sale of Santee Cooper.

Speaker Jay Lucas issues a letter to the Santee Cooper Board of Directors stating that “representations made by Santee Cooper Board members, leadership and staff are not reliable” and states that, had he the authority, he would “seek the immediate and unqualified removal of each member of the Santee Cooper Board and the dismissal for cause, of the entire senior management.”

July 2020 – Santee Cooper extends contracts for its million-dollar a year CEO and sponsors the Heritage Golf Tournament despite it having no fans in attendance.

July 31, 2020 – Three years since the VC Summer Project was abandoned with no relief in sight for customers or South Carolina taxpayers.

Guest Columns

Tackling Tough Issues in the African-American Community, from Coronavirus to Santee Cooper

Featured Image: Georgetown Harbor/Marina.com

A Georgetown-based organization finds itself uniquely positioned to deal with a crucial aspect of the coronavirus pandemic: its unequal impact on marginalized communities. For weeks, experts have been reporting that COVID-19 is affecting people of color at a higher rate. According to the S.C. Department of Health and Environmental Control,

African Americans account for 41% of the positive COVID-19 cases in the state.

Stepping up to address that disparity is the Gullah Geechee Chamber of Commerce. Founded by Georgetown businesswoman Marilyn Hemingway in 2018, the organization promotes entrepreneurship in the coastal African-American community, offering resources and information that help the community thrive and overcome challenges. Today that means dealing with a pandemic that is hitting the community hard, physically, and financially.

“We’re in the business of helping our Gullah communities grow economically and this is even more crucial during the coronavirus pandemic,” Hemingway recently told the Charleston Chronicle.

The Gullah Geechee community stretches along coastal areas and the sea islands of North Carolina, South Carolina, Georgia, and Florida — from Pender County, North Carolina, to St. John’s County, Florida.

Through weekly, online forums available through the Chamber’s Facebook page, Hemingway interviews a variety of guests offering advice to small businesses trying to stay afloat, gain access to assistance, as well as health and wellness tips.

Hemingway has also taken a strong stand on environmental and energy issues and has been a frequent voice advocating for the sale of Santee Cooper. In a letter published by FITSNews, she wrote,

“We know that Santee Cooper’s reform plan places an unfair burden on a marginalized community that can least afford to fix the problem. Problems created by a Board of Directors and management that does not reflect the demographics of the state.” Hemingway recently submitted a Freedom of Information Act request for Santee Cooper’s record on diversity management programs and has launched a petitionadvocating for a sale of Santee Cooper.

Hemingway’s online talk shows, called “The Gathering Place, feature guests talking about a range of issues from telemedicine, health insurance to aid for struggling businesses, and are held every Sunday and Wednesday at 4.p.m.

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Santee Cooper South Carolina Coronavirus Funding

Santee Cooper’s Actions Caused Certain Senators To Derail Emergency Coronavirus Funding Legislation

The South Carolina Legislature was called back earlier this week for what was supposed to be a quick one-day session to pass a piece of emergency legislation that would help prevent a government shutdown and provide emergency funding to address the coronavirus crisis. But a familiar roadblock caused that plan to crumble.

While this was expected to be a quick vote, a resolution in the legislation involving Santee Cooper prevented senators from coming to an agreement, while House members decried action taken by Santee Cooper in recent days to deceive the legislature into believing they had negotiated a deal with Central Electric cooperative.

The latest move by Santee Cooper has angered many including Electric Cooperatives of South Carolina CEO, Mike Couick and Speaker of the House Jay Lucas.

Couick was quoted as saying “I grew up watching ACC basketball and Dean Smith mastering the game of four corners. If Santee Cooper is an expert at nothing else, it is an expert at delay, and delay of reform and transformation…”

In a letter to Santee Cooper’s leadership, Speaker Lucas wrote, “If state law gave me or the House of Representatives the authority, I would seek the immediate unqualified removal of each member of the Santee Cooper Board and the dismissal, for cause, of the entire senior management. Unfortunately for the people of South Carolina, I do not have that authority. However, I do predict and will applaud your ultimate removal from your positions in the appropriate manner.”

You can read the full letter from Speaker Lucas here.

The proposed emergency legislation included plans for COVID-19 funding, education funding for teacher salaries, funding to ensure South Carolina primaries can still take place safely on June 9, and other necessary government-funded operations that would allow the state to continue to run in the case that a budget isn’t passed before the start of the next fiscal year.

It also included a provision to postpone the debate on Santee Cooper and prevent the utility from engaging in any long-term contracts of more than a year until the work on what should be done with the state-owned utility is fully explored.

As reported by the AP, Santee Cooper spokeswoman Mollie Gore apologized for their actions in an email calling the utility’s words ‘presumptive and premature’.

Moreover, Governor McMaster slammed Santee Cooper on Twitter, saying, “There appears to be no tactic or action too deceitful or reckless for the leaders of Santee Cooper to employ,” accusing the utility of exploiting the current pandemic to avoid a sale or any type of reform.

Senators, on the other hand, debated the resolution for over five hours only to come back with an amended resolution that sent it back to the House for review. Certain senators such as Senator Rankin and Senator Grooms refused to approve the emergency legislation needed to keep the state running because of their support for Santee Cooper and did not want to put any limitations on the utility despite their history of mismanagement and lack of transparency.

Currently, there are plans for either the House or Senate to return to take further action.

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South Carolina Senate And House Members Santee Cooper

South Carolina Senators’ Latest Vote On Santee Cooper Offers No Solution

Just like that and we’re back to square one with Santee Cooper.

Going into last week South Carolinians were hopeful lawmakers would give a direction on what the future of debt-riddled, state-owned Santee Cooper would look like.

However, after Thursday’s vote, it doesn’t look like that’s the case.

Lawmakers were given three different proposals recommended by the Department of Administration, one to purchase the utility submitted by Florida-based NextEra Energy, one to manage submitted by Virginia-based Dominion Energy, and a reform plan from Santee Cooper itself.

On Thursday, the House of Ways and Means Committee rejected the three proposals presented by the Department of Administration, then moved to negotiate further with NextEra on a sale and move ahead with extensive reforms to Santee Cooper in the interim. Meanwhile, the Senate Finance Committee revealed their decision which was ultimately to give Santee Cooper more time to reform even though the plan didn’t address Santee Cooper’s billions of dollars of debt. Sen. Leatherman appointed a special committee lead by Sen. Setzler and Alexander to take a closer look at the reform plan and see what can be done.

South Carolinians hoping to be free from the burden of Santee Cooper’s debt and mismanagement were likely disappointed by the Senate’s seeming rejection of plans for a solution.

Both, the House and Senate’s decision removed Dominion’s management plan, which also failed to address the billions of dollars of debt owed by Santee Cooper, as an option.

While some senators are holding out hope for Santee Cooper, House members are looking to negotiate a better deal with NextEra that will protect Santee Cooper’s two million direct-serve and electrical cooperative customers and South Carolina taxpayers.

Santee Cooper critics are concerned with the utility’s lack of oversight and years of wasting their customer’s money on failed projects, board member retreats, legal fees, and high-paid executives and golden parachutes.

Michael Couick, CEO of The Electric Cooperatives of South Carolina, Santee Cooper’s largest customer, told senators “They [Santee Cooper] just don’t care.” U.S. News reported that the electric cooperatives are disgusted with Santee Cooper’s treatment and the utility reportedly ignored warnings from the cooperatives about the V.C. Summer project.

Couick went on to say “This is how they make money. They charge what they spend.”

The current reform plan doesn’t address the current debt fully, only cost-cutting measures such as workforce reduction and plant closures, adding to concerns that customers and taxpayers will have to continue paying off the debt through increased rates and taxes.

The current fear among critics is that this reform plan leaves room for Santee Cooper to not change and leaves its ratepayers and customers with a debt burden too large thereby making the company unable to make necessary upgrades and changes in order to have a viable and strong utility.

House members hope that in negotiating a better deal with NextEra who is already promising to resolve the utility’s debt and provide nearly $1 billion in ratepayer relief, the state can move past the largest financial disaster in South Carolina history, move on to other issues, and save customers and taxpayers.

In a recent report from Forbes, Palmetto Promise Institute Chairman Phil Hughes was quoted saying “The offer from NextEra is very generous and resolves all debt. Accepting this offer will allow for real ratepayer relief and taxpayer protection.”

So what happens now?

South Carolinians, will, unfortunately, have to wait even longer to find out what will happen as the House and Senate try to come to a decision, all the while, Santee Cooper’s debt, which increases by around a million dollars each day, will continue to grow and other important issues like education will continue to take a backseat to this issue.

A spokesperson for NextEra was reported by The State as saying they’re open to negotiations.

While House members look to negotiate with NextEra, senators have been tasked with helping improve Santee Cooper’s reform plan. However, critics of a Santee Cooper reform are questioning whether real reform is possible even with legislation and what the government’s role should be in the utility business.

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South Carolina Lawmakers Continue To Discuss Santee Cooper

We’re going into another week of the 2020 South Carolina legislative session and while progress continues to be made on one pressing issue another has stalled yet again.

Earlier this month, the Department of Administration handed over a report to lawmakers with its three recommendations for the future of Santee Cooper.

Currently owned and operated by the state, Santee Cooper is $8 billion in debt, half of which stems from the failed V.C. Summer project which was abandoned back in 2017. Since then, lawmakers have been trying to figure out what to do with the utility. Meanwhile, the utility, which has no oversight, must raise electric rates to pay off the debt at some point despite Santee Cooper’s claim of a near-term rate freeze.

Lawmakers will continue to discuss the three proposals this week. Of the three proposals, one is a bid to purchase the utility entirely, one is a bid to manage, and one is a reform plan from Santee Cooper itself.

The report, which was released earlier this month, unveiled details of the management bid submitted by Dominion Energy, the bid to purchase submitted by NextEra Energy, and the reform plan proposed by Santee Cooper.

Virginia-based Dominion Energy purchased SCE&G last year, a move that many former SCE&G customers are still dissatisfied with. The proposal submitted by Dominion states that three or more key management positions at Santee Cooper would be filled by top Dominion employees, and it also states that the plan should happen in tandem with Santee Cooper’s reform plan but does nothing to pay off the company’s debt.

The reform plan presented by Santee Cooper includes a workforce reduction and a plan to lower customer rates over a 20-year period. However, some are skeptical of the plan given that similar claims have been made by the utility who promises a rate freeze but eventually will have to raise electric rates over the years to pay off its debt because its customers are the only source of revenue.

The last option, made by Florida-based NextEra Energy, is the most dynamic of the three. Similar to Santee Cooper’s reform plan, it includes a workforce reduction; however, the proposal states that the company would pay off Santee Cooper’s debt and relieve Santee Cooper’s two million direct serve and electric co-op customers of the responsibility. The proposal also includes the acquisition of both Lake Marion and Lake Moultrie, a four-year rate freeze, and nearly $1 billion in relief to customers.

In a quote provided to the State, Travis Miller, a utilities’ analyst for Morningstar Inc. said, “NextEra is definitely the cream of the crop and could get it done if anybody could get it done.”

Now, lawmakers have thirty days to make their recommendations.

While this is good news for the customers who have been waiting for an answer on the future of Santee Cooper, many South Carolinians are upset about the lack of movement on the education front.

The Senate debated on the “South Carolina Career Opportunity and Access For All Act” until 11:30 pm last Tuesday.

The debate will continue. According to the Senate Journal, over 100 amendments to the bill have been debated so far.

What are your thoughts on the three proposals for Santee Cooper, and do you think more focus should be put on education?

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A Small Win For Santee Cooper Direct-Serve And Electrical Cooperative Customers

While Santee Cooper’s millions of direct-serve and electrical cooperative customers await a decision from lawmakers on the future of the state-owned utility, a trial date has been set for the ongoing lawsuit between Santee Cooper and its customers.

Last week, former South Carolina Supreme Court Chief Justice, special Judge Jean Toal, set the trial date for April 20.

The decision was a significant blow to debt-riddled Santee Cooper, which will now give lawyers representing the millions of Santee Cooper customers time to go through tens of thousands of documents that were turned over by Santee Cooper just one day before the trial date was set.

Santee Cooper customers filed the lawsuit in August 2017 seeking refunds for the millions they had already paid and to put an end to the continual payments they were being charged for the failed V.C. Summer project.

For years, customers have paid extra fees on their monthly bills. Santee Cooper spent approximately $4.7 billion on the failed nuclear project and rely only on their customers to pay the company’s debt.

It was just last month that U.S. Judge Terry Wooten sent the lawsuit back to state court to be heard by special Judge Jean Toal.

Judge Toal’s decision also allowed the case to become a class-action lawsuit allowing for many more people to be able to seek refunds. Also in her decision, Judge Toal did not limit the potential monetary penalties and suggested that Santee Cooper should find a way to settle the case so that a trial could be avoided.

Meanwhile, Santee Cooper continues to rack up legal fees to fight back, adding even more to the billions of debt already owed and being paid by its customers.

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Discussions About Santee Cooper Continue

Featured Image: Charleston City Paper

We’re two weeks into South Carolina’s 2020 legislative session and the talk around what to do with state-owned Santee Cooper continues.

The latest to speak out on the issue is founder and CEO of the Gullah Geechee Chamber of Commerce, Marilyn Hemingway, who was reported saying “Santee Cooper has forgotten its mission of providing low-cost services”, by The Chronicle.

During her interview, Hemingway referenced both the $250 million loss in 2009 after the state-owned utility pulled the plug on the Pee-Dee coal plant before construction finished as well as the billions of dollars wasted during the 2017 abandonment of the V.C. Summer project.

Furthering her point, she alluded to the millions of dollars spent in legal fees after these projects and the newly appointed executives who are paid more than any other state agency, $2.4 million annually.

On top of the overwhelming amount of evidence that points to the wasteful spending, Governor McMaster’s office released a statement stating “Paying off Santee Cooper’s debt will cost direct-serve customers in Horry, Georgetown, and Berkeley counties about $6,200 per household. It will cost customers of the 20 electric cooperatives who distribute Santee Cooper’s power about $4,200 per household.”

The statement left many confused after hearing from Santee Cooper this summer that it would be freezing rates. However, the latest move from Santee Cooper points to this claim as ringing false. The state-owned utility recently filed a motion to stop any reference to future rate hikes during their current class-action lawsuit, hoping to keep jury members in the dark. Critics say the move is similar to Santee Cooper’s lack of transparency during the V.C. Summer fiasco, which also kept ratepayers in the dark.

As lawmakers look at the proposals put in front of them, South Carolina residents, like Hemingway, are recognizing the inevitability of rate hikes if no change is made.

The statement released by Governor McMaster’s office continues by stating the “Governor instructed each of the interested purchasers that they will not consider any proposal which saddles the ratepayers or taxpayers with any of Santee Cooper’s $4.3 billion nuclear construction debt” and that they must provide the state with the best solution possible, one which protects ratepayers while recognizing the valuable contributions of current and former employees of Santee Cooper.”

It is unclear what lawmakers will decide to do with the state-owned utility; however, it is clear that millions of South Carolinians are at risk of increased utility rates and may not even know not it.

Hemingway concluded: “From our point of view, we should start over. Now is the time for South Carolina to show some leadership.”

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