South Carolina lawmakers delay decision on Santee Cooper’s fate for a year

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The South Carolina Legislature postponed a decision on whether to sell Santee Cooper for a year, paving the way for the state-owned utility to settle a major class-action lawsuit over a failed twin nuclear reactor project.

The Legislature, which had trouble meeting recently because of the coronavirus pandemic, set strict operational parameters for the utility in House Bill 3411, which is also a continuing resolution that keeps the government running at current spending levels until the impact of COVID-19 on state revenues can be assessed. The fiscal year begins on July 1.

The South Carolina General Assembly put off making a decision about whether to sell state-owned Santee Cooper until May 2021.

Gov. Henry McMaster signed the bill on May 19.

The bill contains restrictions and oversight provisions pertaining to Santee Cooper, known formally as the South Carolina Public Service Authority, which are expected to remain in effect until May 31, 2021.

In addition to prohibiting the authority from entering employment contracts with terms longer than six months, HB 3411 creates the Santee Cooper Oversight Committee that would need to approve many of the utility's actions and proposed contracts. The committee is composed of the governor, president of the Senate, speaker of the House, and the chairmen of the Senate Finance Committee and House Ways and Means Committee.

The bill allows the utility to interact with Central Electric Power Cooperative, Santee Cooper's largest customer, to issue debt, and to resolve outstanding claims and lawsuits, including the class-action complaint filed by Jessica S. Cook on Aug. 22, 2017, in which a negotiated settlement is pending.

"The continuing resolution permits Santee Cooper latitude to work with Central on resource and strategic planning and to pursue a defined list of cost savings for customers [and] it also provides interim oversight until May 2021," said utility spokesman Mollie Gore. "Although Santee Cooper wanted greater latitude, the approved measures will yield benefits for all our customers and still protect legislative options for future consideration of Santee Cooper.

"We appreciate the hard work by legislative leadership involved in shaping this interim path forward."

The Legislature's strict oversight of Santee Cooper is due to its handling of the botched twin nuclear reactor project at the V.C. Summer Nuclear Station, in which the state-owned utility was a 45% partner with South Carolina Electric & Gas the 55% majority owner that headed up construction.

Santee Cooper had issued about $4.2 billion of debt for the project when it was determined that it was too costly to complete. Work was halted July 31, 2017.

In this year's legislative session, lawmakers were poised to consider whether to sell the utility, have another entity manage it, or to keep it and enact governance reform measures. When the pandemic struck, it became too difficult to conduct the proceedings and decisions about Santee Cooper's fate were delayed until next year.

So far, however, a July 20 court hearing is still on schedule to finalize a $520 million settlement with the Cook plaintiffs.

If approved by Judge Jean Toal, the settlement requires Santee Cooper to pay $200 million in cash over three years and to freeze rates for four years. Dominion Energy, which acquired SCANA and its subsidiary, SCE&G, in January 2019 and was brought into litigation because of the acquisition, will pay $320 million.

People who want to opt out of the settlement must do so by June 15, and people who want to object to its fairness must do so by July 1. Nothing has been filed in the court case since Toal preliminarily approved the settlement on March 17.

The class-action suit is pending in the Hamilton County Court of Common Pleas. The case number is 2019CP2306675.

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Energy industry Lawsuits Coronavirus Revenue bonds Henry McMaster South Carolina Public Service Authority South Carolina