The South Carolina House approved sweeping legislation that could result in the sale of Santee Cooper or place the state-owned utility under regulatory oversight, a move that would endanger its ability to set electric rates.
Those are just two possibilities detailed in House Bill 4376, which passed by a vote of 104 to 7 on Tuesday. The measure is now before the Senate.
Santee Cooper, formally known as the South Carolina Public Service Authority, has encountered public and political blowback since its decision in July to stop building two nuclear reactors in conjunction with South Carolina Electric & Gas, an investor-owned utility.
Between the two utilities, about $9 billion was spent on the partially built reactors. Santee Cooper issued about $4 billion of debt to finance the failed project.
The House’s plan would create a nine-member committee to evaluate whether to sell Santee Cooper or parts of the utility, which includes water systems.
The committee would also obtain a valuation; develop a public process to conduct hearings and receive bids from potential purchasers; determine the future role of Santee Cooper, whether it is sold or retained by the state; and consider if it should be subject to oversight by the Public Service Commission.
Santee Cooper is self-regulated, and placing it under the PSC would be viewed as credit negative, according to Moody's Investors Service.
“Regulatory oversight would add an additional step and would increase uncertainty about the timing of and manner of cost recovery,” Moody’s said in a 10-page review of pending legislation.
The new committee evaluating the sale of Santee Cooper must also analyze the impact it would have on Santee Cooper’s 1,700 employees and retirees and whether bidders must maintain current workforce levels and pension commitments.
The future of the utility’s workforce concerned State Rep. Alan Clemmons, R-Horry.
“It is incumbent upon us and the people of South Carolina to do right by those employees,” Clemmons said during the debate on HB 4376.
Santee Cooper, according to the bill, would be required to create an interest-bearing account to be called the Rate Reduction and Stabilization Fund, into which the $895 million it received in a settlement with Toshiba Corp. must be placed along with any asset and salvage sales from the abandoned nuclear project, as well as any annual surplus funds.
The bankruptcy of Toshiba subsidiary Westinghouse, which was supplying the reactors, led to the decision to pull the plug on the nuclear project.
Money from the fund must be used annually to reduce or stabilize electric rates and charges to mitigate abandonment of the nuclear project, including debt reduction.
Santee Cooper has about $8 billion of outstanding bonds, more than half of which was issued for its share of the shelved nuclear reactor project. The debt is co-mingled in the utility’s portfolio.
Santee Cooper had already announced a plan to use the Toshiba settlement to repay debt in order to avoid rate increases for the next two years.
HB 4376 in its current form would force the 12 directors of the authority to step down, and a new board would be appointed.
The bill would also create a new advisory board to the South Carolina Public Service Authority consisting of the governor, the attorney general, the state treasurer, the comptroller general, and the secretary of state.
In addition to consulting with the directors, the advisory board would receive annual reports on the finances and work of the authority, and it would designate firms to do annual audits.