Editorial: Santee Cooper can’t reform itself. But SC Legislature can. And must. | Editorials
We have known for more than a year that the SC Senate would not agree to sell Santee Cooper. And there were serious questions as to whether the friends of the state utility in the upper chamber would even allow reform despite the disaster that was Santee Cooper’s nuclear escapade with the now defunct SCE & G.
The reform could still die on the Senate calendar, but after all we have at least one reform measure up for debate. And it’s backed by Santee Cooper and its biggest customer, the electrical cooperatives.
The cooperatives are tied to a contract to buy electricity from Santee Cooper until 2058 and cannot exit until the utility is sold. The fact that they are happy with the business suggests that the changes are significant.
As attorney John Frick told the Senate Judiciary Committee on Tuesday, p.464 contains four reforms that the cooperatives considered essential: some degree of oversight over Santee Cooper; routine legislative control; a requirement that the utility consider the interests of customers, not just its own financial integrity and economic development; and two ex officio seats for cooperative officers on the board of directors to ensure that Santee Cooper’s board of directors hears their views on interest rates and other matters.
As much progress as these changes would be, they are far from perfect. Although state regulators would have to approve Santee Cooper’s construction and long-term energy plans and comment on tariff proposals, and customers could appeal price increases to the state Supreme Court, Santee Cooper’s board of directors would continue to set the utility’s tariffs. That said, Santee Cooper would continue to function largely as an unregulated monopoly.
Legislators say agreements on Santee Cooper’s outstanding bonds make it financially impossible for them to be subject to an interest rate review by the Public Service Commission, and they are likely right. But they could – and should – prohibit the utility from issuing any more bonds with these restrictions so that the PSC can regulate its interest rates once the old bonds are repaid. Unfortunately, neither p.464 nor a reform measure passed by the House, H.3194, would do this.
And at the risk of sounding like a broken record, the package also lacks the most important reform: the Santee Cooper board would remain almost completely autonomous.
The bill allows the governor to remove a board member without the usual stringent requirements if a legislative committee recommends that the member be removed “for good cause”. It is worth remembering, however, that the Public Utility Review Committee looked the other way while Santee Cooper and SCE & G continued to pour money into the VC Summer nuclear debacle.
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And without a near-unanimous recommendation from the committee, the governor has still not been able to dismiss the Santee Cooper board members before their term expires unless they refuse to attend meetings or to commit misconduct, misconduct or other acts that are criminal of them could pursue the excessive misconduct of the state in official law. They still couldn’t be removed simply because they made hideous decisions that left the $ 4 billion interest payers hooked on a pair of unfinished nuclear reactors that will never produce a single watt of electricity.
It’s hard to overstate that the governor’s authority needs to be expanded: if Santee Cooper’s board members had known the governor could fire them, they would almost certainly have let their boss know when things were going south at VC Summer – and the governor could have alerted the public to the Service Commission so that SCE&G rate increases may not have been stamped until the utility either pulled the plug or exercised more control to get the runaway project back in To bring gear.
And yes, the other reforms in p.464 could offer the same protection. Makes. But why shouldn’t lawmakers make the changes that will almost certainly protect us? After all, for decades the governors had the authority to remove the board members from Santee Cooper for any or no reason without negative repercussions. Lawmakers did not repeal that power until 2005 for reasons that had little to do with maintaining the integrity of Santee Cooper and almost everything to do with their hostility to the then government. Mark Sanford.
And based on what has happened in the two years since the Senate refused to approve Charlie Condon as chairman of the Santee Cooper board of directors – Governor Henry McMaster hasn’t even tried to appoint anyone, so a board member does that he would not have chosen the job – we know the Senate already has the means to prevent a governor from exerting excessive control over the utility company.
One of the mantras of the people who want to sell Santee Cooper is that the utility company cannot reform itself. This is one case where they are absolutely right. But legislation certainly can.
S.464 is a good start, and with a few tweaks, Santee Cooper can make it a utility that will serve its customers and our state well – unless or until someone comes up with a good plan (NextEra is anything but), to take it over from the hands of the taxpayers.