How Santee Cooper customers' rates would change if state sells public utility
- Feb 14, 2020 11:54 am GMT
- 186 views
Feb. 14--COLUMBIA, S.C. -- Santee Cooper's current electric customers would see lower rates for at least four years if the state-owned utility is sold to Florida-based NextEra -- a move lawmakers are considering to resolve a massive debt the utility took on after a failed nuclear project.
After the four years, under NextEra's projection, rates would increase and then be 5% higher than the rates Santee Cooper itself projects it could offer customers if allowed to follow its own reform plan and continue operating as a public utility.
Details of NextEra's proposal to buy Santee Cooper, Dominion Energy's proposal to manage Santee Cooper, and Santee Cooper's own reform plan were presented Thursday to lawmakers.
Those details were released this week in a long-awaited report aimed at helping lawmakers decide the fate of the state-owned utility, which was left with $4 billion in debt after pulling the plug on a plan to build two nuclear reactors in Fairfield County.
Both Santee Cooper's reform plan and NextEra's purchase plans have projected rates lower than what Santee Cooper had in its 2019 20-year outlook.
Under the current Santee Cooper budget, in 2021, rates are projected to be $76 per megawatt hour, $82 per MWh in 2025 and $98 per MWh in 2040.
In Santee Cooper's reform plan, the utility projects to charge $70 per MWh. In 2025 its rates would be $72 per MWh. And by 2040, electric rates would be $92 per MWh.
From 2021-2024, NextEra projects it rates would $64 per MWh. In 2025 rates would increase to $77 per MWh, eventually reaching $94 per MWh in 2040.
NextEra also would provide $941 million in customer refunds and credits, during its first four years of ownership, more than $500 million of that aimed at resolving a ratepayer lawsuit against the utility.
Santee Cooper has said it plans to keep rates stable for 7 years under its reform plan.
State officials defend process
Members of the Department of Administration and consultants they hired presented their report Thursday to legislators on what to do next with Santee Cooper.
Legislators were unable to ask questions during the presentation. But before the meeting, state senators expressed concerns about the utility companies bidding on Santee Cooper trying to sway lawmakers' opinions.
Entities that are involved in the process have signed non-disclosure agreements and aren't allowed to advocate for a certain outcome, state Sen. Shane Massey, R-Edgefield, reminded senators before the presentation. If that prohibition weren't in place, it would lead to lots of public campaigning.
On Thursday, Santee Cooper took some heat in the process as officials presenting the report said the utility was not always cooperative.
The utility had some delays around providing data needed for potential bidders to put together a proposal and presented other challenges, according to the Department of Administration.
"Santee Cooper wasn't necessarily the most willing participant in this process," said financial consultant John Colella, who helped present the report.
Marcia Adams, the director of the Department of Administration, also defended the contract her department had with Gibson, Dunn and Crutcher -- a firm that helped evaluate the proposals to buy or manage Santee Cooper.
"I sit here quite frankly shocked about the events of yesterday, and the concerns raised about the agency's contract with Gibson Dunn and Crutcher," Adams said. "I would not allow Admin to enter into a contract that is biased towards a sale or any other option."
Adams was responding the concerns brought up by state Sen. Luke Rankin, R-Horry, on Wednesday about whether the firm was promised a contingency fee that would be paid only if Santee Cooper is sold. Rankin, the chairman of the Judiciary Committee, has appointed senators to look into the report's process and to ensure impartiality.
State Sen. Stephen Goldfinch, R-Georgetown, who wrote a letter to Rankin raising the concerns, was unable to attend Thursday's presentation and had yet to see the DOA's explanation of the contract with Gibson Dunn, but was confident in his reading of the contract with Gibson Dunn.
"I will keep an open mind and ask them questions going into the future," said Goldfinch, an attorney. "I know contingency fee agreements, because I write them every week."
Adams maintained the process was unbiased, and that state officials were looking for what was best for ratepayers, taxpayers and the state.
Adams said the firm had initially agreed to forego 10% of its $6 million fee unless it needed to do more work to help with a sale of Santee Cooper. But when the issue was raised in August, her department began paying Gibson Dunn in full.
The DOA interviewed several law firms and Gibson Dunn was the only one to propose a cap on its fees of $6 million.
(c)2020 The State (Columbia, S.C.)
Visit The State (Columbia, S.C.) at www.thestate.com
Distributed by Tribune Content Agency, LLC.