Santee Cooper taps retired Arizona executive to lead reform effort

After encountering more than two years of political and legal strife for shelving two nuclear reactors, South Carolina’s largest public power agency is placing its future into the hands of a retired utility executive from Arizona.

Santee Cooper’s board of directors Tuesday voted to hire Mark Bonsall as its new president and chief executive officer to lead the team preparing a proposal to reinvent the agency in an effort to convince lawmakers that it is a valuable asset that the state should retain.

South Carolina's Santee Cooper named Mark Bonsall as president and chief executive officer on July 9, 2019.

Bonsall, who took the helm immediately, requested an 18-month contract saying that he believes he can accomplish his work in that length of time.

The board also hired Charles Duckworth to be deputy CEO and chief of planning; he will focus on future resource development for the utility.

Both Bonsall and Duckworth each worked more than four decades for the Salt River Project Agricultural Improvement and Power District in Arizona. Bonsall worked the last seven years of his tenure as the public utility district’s general manager and CEO until his retirement in May 2018. Duckworth worked on resource planning and acquisitions at SRP until July 2018, according to his profile on LinkedIn.

Santee Cooper’s leadership change comes amid tumultuous times for the state-owned utility, which has been charged by the South Carolina Legislature with developing a reform and restructuring plan while lawmakers also take bids to determine if the agency will be sold or managed by another entity.

The utility continues to struggle with the fallout from the July 2017 abandonment of construction on two partially built reactors at the V.C. Summer Nuclear Station after Santee Cooper issued $4.5 billion of bonds to finance its 45% ownership share in the failed project.

Gov. Henry McMaster, some lawmakers, chambers of commerce, and businesses want the 85-year-old public power agency sold to jettison the nuclear project’s debt, while some lawmakers have said they aren’t convinced that would be best for the state.

“I understand the frustration many have over the canceled nuclear project and debt associated with that, but I know that Santee Cooper can pay off that debt and maintain low customer rates and excellent customer service,” Bonsall said in a statement. “The sequence of events leading to suspension of the V.C. Summer project has tested the trust of state leaders and customers in Santee Cooper, which is understandable.”

Bonsall said he will work to “rebuild that trust.”

Dan Ray, acting board chairman, said Bonsall’s demonstrated leadership and experience at the Salt River Project will be important to Santee Cooper’s customers and to the state to ensure that the utility’s reform effort is “substantial and credible.”

“In addition to building SRP’s financial strength, [Bonsall] has made key decisions that reduced customers’ rates,” Ray said. “He closed a large coal-fired generating station and replaced it with a mixture of gas-fired capacity and utility-scale renewables.”

SRP provides electricity, water supply and irrigation services to customers in the Phoenix-Mesa metropolitan area. It has more than one million electric customers.

The district had about $4.1 billion of outstanding revenue bonds and a debt service coverage ratio of 4.13 times in fiscal 2018. Its bonds are rated Aa1 by Moody's Investors Service and AA by S&P Global Ratings.

Santee Cooper is headquartered in Moncks Corner, a town in Berkeley County. The utility was created by the state in 1934 to provide electric power and wholesale water throughout South Carolina.

As the state’s largest public power provider, Santee Cooper delivers electricity to two million people directly and indirectly through electric cooperatives. It’s known formally as the South Carolina Public Service Authority.

The ratings on $7 billion of debt amassed by Santee Cooper — more than half to fund the failed nuclear project — have been downgraded several times because of the legal and political challenges since work on the reactors ended.

S&P Global Ratings on June 25 cut its rating to A from A-plus and retained a negative outlook citing an assessment of its rating criteria for municipal electric and gas utilities published in September, which includes a review of economic fundamentals, industry risk, market position and operational management.

“Abandoning the V.C. Summer nuclear project exposes [Santee Cooper] to multiple operational, political, and litigation challenges,” said S&P analyst David Bodek.

S&P’s action was its second downgrade in almost two years. Shortly after the decision was made to abandon the nuclear project, S&P lowered its rating to A-plus from AA-minus.

In August 2018, Moody's Investors Service lowered its rating to A2 from A1, and Fitch Ratings downgraded the utility’s bonds to A-minus from A-plus in November 2018. Both have negative outlooks.

South Carolina's Santee Cooper hired Charles Duckworth to be deputy chief executive officer and chief of planning on July 9, 2019.

Santee Cooper said it used the national search firm KornFerry to find and screen CEO candidates to move the agency forward. The firm examined 15 applicants. Of those, 11 had experience with public power agencies, two worked for electric cooperatives, one had experience with an investor-owned utility, and one was a non-utility executive.

The board chose Bonsall, who received a bachelor’s degree from Arizona State University and a master of business administration from the University of Pennsylvania. During his 40 years at SRP, he worked in various capacities, including assistant general manager for finance.

Bonsall will earn a base salary of $1.1 million, and he can make an additional $250,000 through performance bonuses. He also gets a car allowance and up to $40,000 for relocation expenses.

Duckworth will earn $560,000 and he can make performance bonuses up to up to $165,000. His job as deputy CEO includes long-term planning.

According to Santee Cooper spokeswoman Mollie Gore, Bonsall requested an 18-month contract.

“An 18-month contract, which is shorter than we typically have done for CEOs … is what he wanted,” she said. “There is a six-month extension that can be exercised by Santee Cooper.”

Santee Cooper said the new CEO will begin his work conducting a series of listening sessions with Santee Cooper employees, customers and other stakeholders.

Bonsall will work with managers and board members preparing the utility’s restructuring and reform proposal, which is expected to be submitted to the state Department of Administration later this year.

The Legislature decided earlier this year to get bids from interested buyers and firms interested in managing the utility. The bids and Santee Cooper’s restructuring plan will be considered during next year’s legislative session.

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