The $9 billion nuclear fiasco

Santee Cooper hopes a proposed reform plan will convince the legislature that it deserves another chance. That’s despite its poor management of a failed nuclear project that sunk it $4 billion into debt. Essentially, the plan proposes to freeze electric rates for 5 years, cut energy generation costs and reduce the nuclear debt by selling off nuclear equipment. This only sounds great.

Santee Cooper’s rates have already been raised 5% because of the nuclear debt. The utility has said it needs to start phasing in at least another 7% rate hike in 2 years to pay off the nuclear debt in 30 years. A 5-year rate freeze might sound good, but this wouldn’t eliminate the debt. Instead it would increase it. Some have projected the interest on the $4 billion debt increases what the utility owes by $1 million a day. Estimates are that its direct customers will pay between $6,200 and $7,400 for this debt over the next 30 years. Customers of our 20 electric co-ops will pay about $4,200 over 30 years.

If Santee Cooper delays increasing rates 5 years, as the new plan proposes, the debt doesn’t go away. It just gets bigger. Closing a very costly coal plant is a good idea, But taking 10 years to do it, as Santee Cooper proposes, is unacceptable. Private utilities have been closing coal plants for years and doing it a lot faster. Turning to cheaper natural gas is a good idea. But Santee Cooper’s plan doesn’t mention that a new plant could cost up to $1 billion in new debt. Their executives have told legislators that this idea relies on a new Atlantic Coast Pipeline that is 10 years away and might never be built. Turning to solar is a good idea, but it took the threat of a sale for Santee Cooper’s management to see the light.

Buying less expensive energy from the open market would be great. But Santee Cooper told lawmakers this is not possible. Transmission lines are maxed out, and it would cost billions to add more capacity. Santee Cooper has paid millions to store leftover nuclear equipment. Now they propose selling it to help pay down the debt. They say they can get $425 million for it, but this would be a “fire sale.” Don’t expect to get more than $100 million, a drop in the bucket to pay off $4 billion. Selling Santee Cooper to a private utility that offers to remove the $4 billion nuclear debt from customers is the real solution. If a private utility can do that without raising rates, as Dominion Energy did for SCE&G, we should let them.

Mr. Knapp is CEO of the SC Small Business Chamber of Commerce.

“If it were necessary to give the briefest possible definition of imperialism, we should have to say that imperialism is the monopoly stage of capitalism.”

– Vladimir Lenin

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