Surfside Beach Resident Explains Why He Thinks Santee Cooper Should Be Sold

Santee Cooper’s latest actions continue to raise concerns among South Carolina residents and lawmakers.

Last week State Representative Murrell Smith joined the long list of big names that support the sale of Santee Cooper. And as the chairman of the Ways and Means committee, Smith intends to form a subcommittee dedicated to pushing this agenda when session opens in January.

For some residents, this comes as welcome news. One of those residents, Larry Kelley of Surfside Beach, expressed his opinion on why Santee Cooper must be sold in the below letter to the editor.

Letter to the Editor

Santee Cooper must be sold — My Horry News

“With the elections behind us, it’s important for the General Assembly to focus on protecting Santee Cooper ratepayers when it reconvenes in January. Gov. Henry McMaster and the House and Senate leadership have blasted Santee Cooper’s recent decision to go behind the legislature’s back and increase its already crippling debt by $100 million. House Speaker Jay Lucas said Santee Cooper had a “lingering disdain for any oversight.” Sen. Shane Massey said “Santee Cooper desperately needs a house cleaning. The entire board. The entire management team.” Sen. Hugh Leatherman called on the board chairman to resign. Gov. McMaster called the utility a “rogue agency.” Time after time Santee Cooper has proven that its leadership cannot be trusted and that it’s a poorly functioning, unaccountable state-owned bureaucracy, not a well-run utility. It just can’t be fixed. There is no way Santee Cooper can bail itself out of a nearly $7 billion debt hole without rates skyrocketing, especially when it’s adding more debt instead of paying it off. The General Assembly must work towards a sale of Santee Cooper. That’s the only way out for ratepayers and taxpayers.”

— Larry Kelley, Surfside Beach

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Santee Cooper’s Honesty, Accuracy Called Out, Possibly Violating State Law, Again

State officials are once again questioning Santee Cooper after the state-owned agency failed to provide honest and transparent information during a monthly financial review.

In a letter addressed to state lawmakers, the S.C. Office of Regulatory Staff (SCORS) stated that Santee Cooper admitted to omitting “materials in its possession” during a monthly financial review. And, while Santee Cooper executives claim these materials were “inadvertently omitted”, SCORS is no longer standing by their previous statement that Santee Cooper is complying with lawmakers’ orders.

With only a little over a month left until the 2021 South Carolina legislative session kicks off, Santee Cooper’s latest antics are drawing criticism from multiple lawmakers and state agencies.

Nanette Edwards, SCORS executive director, pointed out that her agency’s assessment of Santee Cooper’s adherence to lawmakers’ instructions and the state law was dependent upon the utility providing full and accurate information. The previously mentioned letter, however, claimed that Santee Cooper is not being transparent with this information.

The letter from SCORS comes just weeks after Santee Cooper drew criticism from both South Carolina House Speaker Jay Lucas and Senate Finance Committee Chairman Hugh Leatherman.

Speaker Lucas called out Santee Cooper for its “failed culture” and expressed his concerns over their recent actions including the utility’s decision to sign off on bonds without lawmakers’ approval, possibly violating state law. Even further, Senator Leatherman called for the resignation of Santee Cooper’s board chairman, Dan Ray.

This isn’t the first time Santee Cooper has disregarded lawmakers, in fact, it’s become routine for the state-owned agency.

Mounting criticism, repeated obvious neglect of lawmakers directives, and increasing debt will be at the top of lawmakers’ minds when making a decision about Santee Cooper’s future. South Carolina House Representative Murrell Smith said the House needs to deal with Santee Cooper and make a decision.

Meanwhile, SCANA, now known as Dominion, who was Santee Cooper’s partner in the failed V.C. Summer nuclear project – that cost Santee Cooper billions of dollars of debt, just recently reached an agreement to pay a $25 million civil fine. Former SCANA CEO, Kevin Marsh, just entered into a federal plea deal on charges of fraud and conspiracy related to the nuclear project.

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Second VC Summer Executive Pleads Guilty to Federal Fraud Charges

Featured Image Source: Grace Beahm Alford – Post & Courier

Kevin Marsh, the former CEO of SCANA, has entered into a federal plea deal on charges of fraud and conspiracy in relation to the VC Summer nuclear expansion in Fairfield County. Marsh is accused of defrauding nearly one million South Carolinians who paid inflated utility bills to fund the now-defunct project.

SCE&G and partner Santee Cooper pitched the ambitious project as a one-fix-wonder to growing concerns surrounding accessible energy versus environmental concerns. The duo claimed that the $8 billion dollar investment would provide South Carolinians with a reliable source of clean energy at an affordable cost… once the plant was in operation. Until then, customers would be footing the bill. Customers were led to believe the increased utility prices were only a short term sacrifice for a long term solution, but executives like Marsh made sure customers were left completely in the dark.

According to the South Carolina U.S Attorneys Office, Marsh and co-conspirators, including Santee Cooper executives who have yet to be held responsible, covered-up the structural, logistical, and financial issues that doomed the project from the start. Marsh was found culpable of falsifying critical evaluations and misleading both investors and stakeholders in an attempt to salvage the project as they quietly raised utility prices nine times over the course of the venture.

With the fate of Santee Cooper (a state-owned entity) undecided, customers may be looking at even higher energy costs if lawmakers refuse to sell Santee Cooper. As a state-owned utility, Santee Cooper does not have to adhere to the same regulatory scrutiny as investor-owned utilities and executives can raise rates with just the approval of their own board. Critics point out this lack of accountability is what led to the VC Summer debacle and debt in the first place.

After accepting the prosecutors plea, Marsh is now the second executive to plead guilty rather than face a criminal court. While the specifics of the plea deal are not yet confirmed, it is almost certain Marsh will spend time behind bars along with hefty fines.

Meanwhile, Santee Cooper’s former CEO, Lonnie Carter, retired right after the VC Summer scandal made headlines with a very comfortable retirement package that is also being paid for by Santee Cooper customers, in addition to any legal fees he and other executives managed to rack up.

More cases of criminal misconduct related to the failed VC Summer project are expected to surface as the investigation continues.

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Local African American Business and Advocacy Organization Calls on Legislators to Sell Santee Cooper to NextEra

The Gullah Geechee Chamber of Commerce and its founder, Marilyn Hemingway are calling on legislators to approve the sale of state-owned Santee Cooper to NextEra Energy. The organization, which promotes entrepreneurship and green energy in the coastal African American community, has been critical of Santee Cooper’s economic, environmental, and diversity record.

Earlier this week, Hemingway, joined by James Felder of the Gullah Geechee Leadership Institute at a news conference, announced their endorsement of a sale, saying “It’s time for South Carolina to move past the malfeasance and devastatingly bad decisions of the past and move boldly into a green, renewable energy future. NextEra Energy is the stakeholder we need in South Carolina.”

NextEra Energy has submitted a proposal to lawmakers to purchase debt-riddled Santee Cooper, which included paying-off the nuclear debt owed by the state-owned utility so that it wouldn’t fall to the direct serve and electric cooperate customers.

At the conference, Hemingway and Felder outlined reasons for supporting a sale to NextEra, including:

Clean, affordable energy, with rates 30% lower than the industry average
Award-winning diversity and inclusion programs
Investments in minority-owned businesses
A pledge to work with rural communities to understand immediate broadband needs

“NextEra is not just talking the talk,” Hemingway said. “We have seen the future of energy in South Carolina – and it is NextEra Energy.”

Santee Cooper continues to push a “reform plan” which many have expressed disappointment in, especially the plan’s failure to address key issues such as how it plans to pay off the billions of dollars they owe without raising rates, what happens to rates after the “rate-freeze”, and what happens to the money customers have already paid for through increased utility rates over the years for the failed V.C. Summer project they’ll never benefit from.

With the 2020 legislative session being shortened due to COVID, lawmakers are expected to decide the fate of the utility in 2021. Until then, Santee Cooper’s direct serve and electrical cooperative customers are expected to wait to learn whether things will continue as they always have been with Santee Cooper or if lawmakers will decide to sell to NextEra.

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Santee Cooper Class-Action Lawsuit Settled – Here’s What That Means For You

In the ongoing events that surround Santee Cooper and the V.C. Summer scandal, a $520 million settlement has been made in the case of Jessica Cook. However, the settlement amount, which was already just a slither of the debt pie Santee Cooper has racked up, came out to an even lesser amount of $300 million, to be made in two payments, by the time all legal fees were paid.

The class-action lawsuit, led by Jessica Cook, was filed in 2017 over the failed V.C. Summer project and the billions of dollars wasted and being passed onto all of the utility’s direct-serve and electric cooperative customers.

The settlement also includes a 4-year “rate freeze,” leading many to believe that efforts to sell Santee Cooper could come to a halt. However, the debt that customers are already paying for is still being paid through their power bill, essentially paying themselves for the rate freeze. Additionally, as previously stated, the settlement amount is just a small fraction of the total debt that will eventually have to be paid off.

In the larger scheme of things, the state-owned energy company is still billions of dollars in debt, due to the V.C. Summer, failed projects, and other ventures. So, while the Cook case is a win in the eyes of some, it does little to fix all of the outstanding issues surrounding Santee Cooper or give customers any answers to the rest of the debt that is owed or the debt they’re already paying for.

More news has just recently been released that the company is paying $1.1 Million to former Santee Cooper lawyer, Mike Baxley. Mr. Baxley served on the Santee Cooper general counsel and was recently laid off in efforts to cut costs. However, he was sent on his way with $495,000 and will receive an additional pension over the next 15 years. Baxley was also given additional compensation in return to agreeing not to sue the company and was added to the list of former executives who left with a golden parachute being paid by customers.

Giving large payouts is business as usual for Santee Cooper who paid gave golden parachutes to outgoing executives associated with the V.C. Summer debacle. However, what does this mean for ratepayers in the future? The company continues to shovel money into paying out their executives while the 4-year “freeze-rate” does little for Santee Cooper’s direct serve and coop customers since they continue to pay for the debt as it piles up. The only real way to protect Santee’s customers is to sell Santee Cooper to an IOU that will have proper oversight and eliminate the debt otherwise there is no question that rates will skyrocket at the end of the rate-freeze time period.

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Despite Santee Cooper's claims of improved transparency, Santee Cooper board members continue meeting behind closed doors ignoring lawmakers request to stop.

Santee Cooper Board Continues Meeting Behind Closed Doors Despite Claims Of Improved Transparency

Due to continued scrutiny towards Santee Cooper, the power supply company has pledged to be more transparent in their dealings stating that they would be improving transparency moving forward and reporting publicly.

Despite this claim, it seems that a lack of transparency still exists. While Santee Cooper’s board meetings are live-streamed for the public, there’s a portion of the meetings which are not – the executive session. During the executive session, the board stops the live-stream and resumes upon entering back into regular session, meaning the general public has no knowledge of what is being discussed during this time. Being a common practice amongst many boards, this shouldn’t necessarily raise any red flags; however, records show that Santee Cooper’s Board has spent nearly twice the time in executive session as they have in regular session since the beginning of this year.

As a result of the increase in time spent in executive session, lawmakers requested that the board no longer meet in these sessions on April 9; therefore pushing the board to oblige to their promises of transparency. Lawmakers also made this request to ensure that the intent of the board is clear, if the Santee Cooper board is spending the majority of their meetings in executive sessions then their intent to improve transparency and implement change can and will be questioned by the state.

During April’s board meeting, Santee Cooper obliged to the state’s request to not hold an executive session. However, just one month later an executive session was held in May, going against the lawmaker’s request. This inconsistency by the Board is seen as questionable by many and is not the only red flag seen in recent months.

Lawmakers’ attempt to hold Santee Cooper accountable for their promise to be more transparent has failed yet again, something that Santee Cooper direct serve and electric cooperative customers are all too familiar with. These customers deserve to know where their money is going. They deserve to know if the promise of rate freezes will be true or if this is yet another false promise. They deserve to know how the billions of dollars of debt will be paid if rates are frozen especially when they continue to pay for the failed V.C. Summer project, golf tournament sponsorships, board retreats, a million-dollar CEO salary, retirement for former CEO Lonnie Carter, and other unnecessary expenses that customers see no return on.

It seems as though Santee Cooper has relied on customers to keep paying while not questioning increases in utility rates and remaining in the dark about where exactly their money is going, as some lawmakers turn a blind eye, for too long.

They’ve grown comfortable with secrecy and mismanagement and certain lawmakers have allowed it. For the first time in years, South Carolinians are being brought to light and asking for lawmakers to do something about the state-owned and operated utility and not just let it “reform itself” again.

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Santee Cooper VC Summer Anniversary Timeline

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.

Featured Image Source: Grace Beahm Alford – Post & Courier

Featured Image: ABC4 News