Santee Cooper ratepayers

Santee Cooper Extends Executive Contracts And Sponsors Golf Tournament Amid Financial Disaster

Featured Image: The State

As debt continues to pile up for Santee Cooper, lawmakers still remain halted at their decision for the future of the state-owned utility company. After lawmakers were forced to take a break earlier this year due to COVID-19, the utility’s fate will linger even longer.

With the decision to sell still on the table, Santee Cooper in an attempt to continue reform plans is spending more ratepayer money on extending high-paying contracts to executives and on golf tournament sponsorships.

The company recently announced that they will be extending contracts to Mark Bonsall, the CEO, and Charles Duckworth, the deputy CEO who were both brought on last year after former CEO, Lonnie Carter retired from the company when the utility’s debt began making headlines. Carter left with an initial payout and an annual retirement salary of $800,000 for 20 years, that Santee Cooper customers are still paying for.

Last year we reported that Bonsall was guaranteed $1.1 million over the next 18 months in addition to bonuses, exceeding Carter’s previous salary of $541,000, while Duckworth made a reported $560,000 annual salary. All of which the utility’s direct serve and electric cooperative customers pay for, and it doesn’t look like it’ll be changing anytime soon. The two will remain with the company until July 2021 and will continue to oversee all political and legal challenges. Bonsall and Duckworth will even have the opportunity to earn bonuses, pending their performance.

Lawmakers have been debating the future of the company for the past three years since it undertook $4 billion in debt from the failed V.C. Summer project. Because of this, Santee Cooper has been under scrutiny with where they spend their money since the company’s debt is nearly $7 billion, has no Public Service Commission Oversight and its ratepayers are the only ones responsible for past bad financial decisions. Many, therefore, are not happy that the state-owned company decided to sponsor the Heritage Golf Tournament for yet another year. The tournament which was played 2 months later due to the coronavirus pandemic and without fans, was a large investment. This large expenditure is seen as unnecessary by many and has resulted in another level of concern with taxpayers and ratepayers.

As customers are left holding the bill for the interim and Santee Cooper fails to acknowledge the long term burden on them, they also fail to stop spending large sums of money that will only add to the already existing and growing debt. For some, a sale of the public utility “dinosaur” cannot come soon enough.

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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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South Carolina Gov and Speaker Applaud ICF Report, Saves SC Ratepayers Money

Feautred Image: Santee Cooper’s Cross Plant, Post and Courier.

The State of South Carolina is one step closer to discovering what’s in store for the future of Santee Cooper.

Last Friday, ICF International, the Virginia-based consulting firm appointed to review all bids for purchasing Santee Cooper, finished reviewing all submitted proposals and sent their evaluations to the House-Senate special committee currently reviewing the potential sale of the state-owned utility.

In the forty-page report, ICF revealed there is a strong market interest in purchasing Santee Cooper and some of the bids will prevent ratepayers from having to pay the V.C. Summer debt and keep rates low.

ICF reported that they received fifteen different proposals from ten parties. Of those proposals, four were for full offers to purchase the state-owned utility and pay off or provide defeasance of Santee Cooper’s over $8 billion debt, while others’ offers proposed only purchasing parts or taking over its management.

The four full purchase proposals would result in lowered average customer electricity rates over 20 years compared to the projected increased Santee Cooper rates over the same length of time. Three of the four proposals pay off the debt with no request to recover the costs, while the fourth fully assumes the debt.

ICF’s report lays out how a utility company would be able to purchase Santee Cooper, pay off the debt, and charge lower rates for Santee Cooper’s two million direct serve and co-op customers, which goes against some South Carolina Senators’ initial thoughts that finding a buyer that could eliminate the debt and lower rates would be impossible.

House Speaker Jay Lucas and Governor Henry McMaster are enthusiastic about this possibility.

As quoted by The State, Lucas expressed his thoughts on the report stating, “An initial review of the report confirms my goal of providing maximum relief for the ratepayers in this process.”

Both feel that now is the right time to take action. “This is a historic moment,” McMaster said in a statement to The State. He continued by insisting there was no reason to delay action and pleaded for the General Assembly to review the report and put South Carolina ratepayers and taxpayers first.

Despite the push from many to make a decision, the state Senate is continuing to drag its feet.

The next step is for ICF to present its findings to the special legislative committee on today, Wednesday, February 6, 2019. From there, the committee will then prepare final recommendations to present to the General Assembly.

For more information visit Energy Consumer of the Carolinas.