Utility sale could leave taxpayers with $4B of nuclear debt
Selling South Carolina's state-owned utility could force taxpayers to cover its $4 billion debt from a now-abandoned nuclear power project, its chairman told senators Tuesday.
The scuttled expansion of the V.C. Summer Nuclear Station accounts for half of Santee Cooper's total debt of $8 billion. Even if the utility can find a buyer, no company would be willing to acquire that debt, meaning the state would have to pay it, said board Chairman Leighton Lord.
He was among utility executives testifying before a Senate panel investigating their July 31 decision to abandon the joint project with South Carolina Electric & Gas. Separately, the privately-owned SCE&G hopes to recoup its $5 billion in debt through customer charges and other sources.
Gov. Henry McMaster has said he's talking with other utilities about the possibility of buying out Santee Cooper's 45 percent share, or even buying the state-owned utility outright, as a way to complete at least one of the two reactors under construction.
Lord said he knows of no utility willing to buy Santee Cooper and complete the project. In theory, he said, a buyer could pay the state enough for the utility's assets to pay off the other debt, but "$4 billion of nuclear debt would stick with the state."
Selling Santee Cooper would require legislative approval.
"Assuming the governor pushes through with this and convinces the Legislature to sell Santee Cooper, right now, the only plan for the debt is to go on the backs of taxpayers?" asked Sen. Stephen Goldfinch, R-Murrells Inlet.
Senate Minority Leader Nikki Setzler, D-West Columbia, said that's a nonstarter.
"We're not talking about putting $4 billion on the backs of South Carolina taxpayers," he said.
Sen. Mike Fanning told utility executives that customers should get back the roughly $2 billion they've paid through a series of rate hikes since 2009. The defunct project accounts for 18 percent of SCE&G's residential electric bills and more than 8 percent of Santee Cooper's.
Those hikes have covered the interest costs on borrowing, not the project itself, said Jimmy Addison, the chief financial officer of SCE&G's parent company SCANA.
"Consumers are left holding the bag. They either need to get their rates back or get a return on the investment," said Fanning, a Great Falls Democrat whose district includes the nuclear station about 30 miles north of Columbia. "Consumers will get nothing back from that debt."
Addison led SCANA's presentation after CEO Kevin Marsh was taken to a hospital in severe pain. Marsh sat through the first part of the meeting, but SCANA employees drove him to a hospital just before his scheduled testimony.
He was treated for kidney stones and released Tuesday afternoon, said SCANA spokeswoman Rhonda O'Banion.
Both the House and Senate have created committees to investigate the utilities' decision. Tuesday's meeting was the Senate panel's first. A House panel meets for the first time Wednesday.
Senators voted to subpoena a nearly two-year-old independent analysis by Bechtel on the project's status.
"That is vitally important to show us what went wrong and what steps coulda, shoulda and woulda been taken," said Senate Judiciary Chairman Luke Rankin, R-Conway.
The project was already years behind schedule and billions over budget when lead contractor Westinghouse declared bankruptcy in March, voiding a fixed-price contract negotiated in 2015 to limit costs to $14 billion. Utility executives said they were forced to give up after determining the price tag for completing the project, budgeted at $11 billion in 2008, had soared beyond $20 billion. The post-bankruptcy-analysis also concluded both reactors could not be operational until 2024.
While the utility executives blamed Westinghouse, senators said the utilities have known for years that problems existed yet failed to change course.
"At some point, a monopoly has a responsibility," Setzler said.