Santee Cooper Debt

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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Local Residents Give Their Thoughts On Santee Cooper

South Carolina residents and lawmakers are gearing up for the state’s 2020 legislative session beginning in January and the many hot-button issues that are up for debate this year.

One of the issues at top of mind is that of Santee Cooper.

In January, lawmakers will review recommendations for the state-owned utility, and make a decision on the future of the debt-riddled utility company.

With billions of dollars of debt that customers could be on the hook for, many customers are expressing their concern.

Letters To The Editor

Santee Cooper Bailout? – South Strand News

“Santee Cooper is again proving it’s an unaccountable state agency operating in the shadows. For years, the state-owned utility has promised that South Carolina taxpayers won’t have to bear the burden of the nuclear debt. So much so that one of its “Facts are Facts” blog posts is titled “Taxpayers Are Not Responsible For Our Debt.” To quote the post, “FACT: Our debt will be paid off through our revenues, and not by tax dollars.” Lies. Last month Santee Cooper filed a lawsuit against the SC State Fiscal Accountability Authority and the SC Insurance Reserve Fund in an effort to recover the money it lost in the V.C. Summer nuclear fiasco. Both are state agencies. So that means Santee Cooper is seeking a bailout from the state, plain and simple. Many have suspected that this would happen. Santee Cooper kept denying it. The truth always comes out. Santee Cooper can’t fix itself and will have to depend on taxpayers to dig itself out.”

– Lee Padgett, Georgetown

Letter To The Editor: Santee Cooper – Charleston Chronicle

“Since 2012, Santee Cooper, the state-owned and largest utility, has increased rates by 15% to build the VC Summer nuclear plant that ultimately failed. The immediate impact felt by laid-off workers and the local rural community was horrendous enough but the fall-out will continue for years to come because of the lingering debt of $10 billion. Rates are expected to increase unless major changes take place.

This is a real negative impact on low-income, marginalized communities where regular, everyday folks working 2-3 jobs, lack transportation make real-life decisions about keeping the lights on. Santee Cooper is conducting a getting to “know the CEO” tour of our state with “movers and shakers” but where is the concern for those folks who can’t afford the admission fee for private receptions or closed forums.”

– Marilyn Hemingway, Charleston

Easy Choice On Santee Cooper – South Strand News

“Now is the perfect opportunity for legislators on both sides of the aisle to sell failed utility Santee Cooper and protect ratepayers from skyrocketing rates.”

– Thomas Herron, Myrtle Beach

Santee Cooper Needs To Be Honest With Ratepayers – Summerville Journal Scene

“Santee Cooper is at it again, trying to pull the wool over all of our eyes. The new executives are trying very hard to make you believe they can pay down the $7 billion-plus of debt without raising rates. A few weeks ago they said they’ve got enough money on hand to start paying down the debt. In that same announcement, they said they are also going to freeze rates for the next five years.”

– Claire Robinson, Columbia

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Grand Strand Resident Speak Up On Santee Cooper

Featured Image: Post and Courier

Last summer, the state Department of Administration began the process of accepting bids to buy or manage some or all of Santee Cooper. State lawmakers will be deciding on what to do with the debt-riddled, state-owned utility as soon as January 15. In response, Santee Cooper released its business forecast and newest set of initiatives in what the utility claims to be an effort to pay down the debt without increasing customer’s rates.

Before this forecast was publically released, it was leaked that Santee Cooper was in talks with Georgia based Southern Company in a cost-sharing agreement. Lawmakers and the governer’s office quickly shot down any chance of this plan happening, even threatening to remove board members that voted in favor of the plan.

Santee Cooper quickly abandoned the plan and announced the most recent business forecast including a five-year rate freeze after saying for months rates would increase by at least 7 percent to pay back the more than $7 billion of debt the utility faces, $4 billion of it from the failed V.C. Summer project.

Wayne Mershan, a Murrells Inlet resident, wrote to the South Strand News regarding the forecast’s plan to move to solar and natural gas energy sources. While Mershon acknowledges the need for a transition to solar and natural gas he asks, “How will it be possible to make these necessary improvements when it has over $7 billion in debt? How are they going to accomplish their sustainability goals and get out of debt at the same time without raising rates again?”

It is clear residents are suspicious of how valid Santee Cooper’s most recent forecast actually is. A forecast that includes a five-year rate freeze and a transition to more sustainable energy sources, all while being able to pay down the debt.

This set of initiatives is leaving customers and South Carolina residents wondering, what will happen to rates after five years? Who will pay for these transitions to solar and natural gas considering the infrastructure is not currently in place? And, what will happen to the debt while all of these transitions are taking place?

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Santee Cooper’s Largest Customer Urges They Were Powerless Throughout the V.C. Summer Project

Santee Cooper’s largest customer, the electrical coops that buy three-fifths of Santee Cooper’s power which gets distributed to their customers across the state of South Carolina, is suing the state-owned utility. While the coops are by far the agency’s largest customer, a 38-page claim filed in August works to show that Santee Cooper actively kept the problems of the V.C. Summer construction hidden from the coops.

The project left Santee Cooper billions of dollars in debt. To pay off this debt, the burden falls onto both the state-owned utilities’ direct serve and co-op customers. The 20 co-ops who purchase power from the utility are suing to stop Santee Cooper from charging their customers any more for the debt.

The coops attorney in the case explained, “The emails, letters, etc.described above tell the indisputable story of a project beset almost from the beginning with myriad fundamental, entrenched problems that led inexorably to major delays and cost overruns,” the co-ops’ attorney, Frank Ellerbe, wrote in the filing. “Yet, it was a story Santee Cooper kept largely to itself.”

The coops claim to be powerless throughout the construction process of the nuclear reactors and in turn, should not be held responsible for the debt Santee Cooper faces for their failures. While success for the coops will save millions of customers from having to pay off the debt, there are still a lot of questions left unanswered.

If Santee Cooper is blocked from increasing the coop rates, what will happen to the debt and how will it be paid?

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Grand Strand Residents Are Ready for a Solution to Santee Cooper’s Debt Problem

Just last month, the state Department of Administration announced that it would now be accepting bids to buy or manage some or all of Santee Cooper.

Once the bids are received, the four consulting firms chosen by the state administration will review and pass on their recommendation to the General Assembly. From there, the assembly will make a decision on the future of the state-owned utility.

As this process continues, Santee Cooper’s direct serve and cooperative customers will continue to pay for the utility’s massive debt stemming from the failed V.C. summer project. In the meantime, Grand Strand residents are continuing to express their hope for legislators to sell Santee Cooper, get the state out of the utility business, and get rid of the debt.

Johnnie Bellamy, a Myrtle Beach resident, wrote to The State expressing his thoughts on the issue stating, “Investor-owned utilities have offered to buy Santee Cooper and provide lower long-term rates. Selling Santee Cooper just makes good sense to protect customers from sky-high electric bills.”

However, Santee Cooper has publically advertised to its customers that they have some of the lowest rates in the state, which Bellamy argues, “The electric cooperatives have complained that Santee Cooper has the highest wholesale rates not only in the state but in the region, ranging from 25% to nearly 50% higher than investor-owned utilities.”

Validating his concerns, another South Carolina resident of Murrells Inlet, Dick Richards, wrote to the South Strand News saying, “If a qualified buyer can pay off the debt and offer low rates, it just makes good sense that our legislators vote to sell Santee Cooper to protect ratepayers and get the state out of its failed utility business.”

It is clear residents up and down the Grand Strand would like to see the state move forward with selling Santee Cooper.

Meanwhile, the electric cooperatives that purchase their power from Santee Cooper are in a battle against Santee Cooper to stop them from charging their customers any more for the V.C. Summer debt.

However, while this may help the cooperative customers, there are many questions left to answer if the cooperatives win their lawsuit against the state-owned utility. Will Santee Cooper, a state agency, have to file for bankruptcy?

Or will all the debt be left in the hands of the direct serve customers if the utility isn’t sold?

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Local Residents Voice Concern Over Santee Cooper’s Spending Problem

Featured Image: The Post and Courier

In July, the Department of Administration announced they’d selected four firms, costing $20 million, to advise lawmakers on the Santee Cooper bidding process. Just weeks before this announcement, Santee Cooper dropped the bombshell they’d hired a new CEO with a $1.1 million per year contract, almost doubling previous CEO, Lonnie Carter’s salary, and a new deputy CEO with a $560,000 contract. The pair is set to make over $2 million when including their hefty bonuses.

Both announcements have South Carolina residents and Santee Cooper customers even more worried about the future of their utility rates.

One resident wrote to the Post and Courier discussing the systematic problems Santee Cooper has had throughout recent years stating, “While Santee Cooper is state-owned, it’s highly unlikely there will ever be a direct bailout courtesy of state taxpayers. The debt will continue to be paid by its customers on monthly bills that keep climbing higher when the average person in its service area lives on just $27,065 a year.”

Because while privately-owned utility companies’ rates are monitored by South Carolina’s Public Service Commission, Santee Cooper’s are not. As a state-owned agency, one vote between the utility’s board of directors can simply raise rates. And as Santee Cooper’s debt continues to increase, so will customer’s rates.

A second resident addressed his concerns with the positive sentiment some have shown for the utility’s new CEO stating, “Where else in the world would it make sense for a public utility to lost billions of dollars and have state invite offers for a sale, but then allow its board to hire administrators for hundreds of thousands of dollars to convince those same elected officials not to sell” in a letter to the Post and Courier.

It is clear South Carolina residents are fed up with the missteps Santee Cooper continues to make, costing Santee Cooper direct serve and co-op customers money. With the average customer making just over $27,000 per year, higher rates are not a cost which they should have to worry about. Customers deserve a solution to the debt where those who are responsible pay, not hard-working customers.

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How We Got Here: A Santee Cooper V.C. Summer Nuclear Disaster Timeline

The largest financial disaster in South Carolina history didn’t happen overnight.

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.

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.

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.

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South Carolina Residents Urge For Sale Of Santee Cooper To Happen Quickly

Feature Image: Post & Courier

In late May, lawmakers finally agreed to explore the sale of state-owned utility Santee Cooper after months of debate.

The agreement concluded in the adoption of a resolution which will allow the Department of Administration to oversee the process of collecting and reviewing bids for the utility. Once reviewed, the department will submit its recommendations for the best purchase offer and the best management agreement to lawmakers. Santee Cooper will also submit a reform proposal.

Many Santee Cooper customers are hoping for a sale rather than new management since this option is the only one that won’t burden the millions of coop and direct-serve customers with the debt or leave South Carolina with a bankrupt state agency.

South Carolina resident, David Hood, wrote to South Strand News thanking House and Senate members for their action to pursue a sale and help keep rates from rising once again. “My thanks to the House and Senate members who voted overwhelming to pursue a sale of troubled state-owned utility Santee Cooper to protect ratepayers from big rate hikes needed to pay off its huge debt,” Hood wrote.

In 2015, Santee Cooper raised their rates for the first time to start paying off their V.C. Summer debt, and with no way to pay back the debt without raising rates and the lack of approval needed, Santee Cooper will raise rates again and will continue to do so for the next several decades, if not sold.

Hood also noted the “common-sense criteria for binding bids such as protections for rank and file Santee Cooper workers and their pensions and preservation of the lake system,” two points which many are worried about.

However, the specific criteria required for a sale makes it highly unlikely that South Carolina will abandon Lake Moultrie, Lake Marion or the hardworking employees and retirees of Santee Cooper.

The Department of Administration’s recommendations aren’t due until March 2020 but as Hood wrote to South Strand News, “With interest on Santee Cooper’s debt accumulating at $1 million per day, it’s important for ratepayers that the sale process move forward as quickly as possible.”

Read the full letter here.