Officials Ponder Santee Cooper Sale in Wake of Failed Nuclear Project
South Carolina Gov. Henry McMaster (R) wants to sell Santee Cooper, the state-owned utility, even as state lawmakers discuss how to deal with the group's involvement in the abandoned V.C. Summer nuclear project. Lawmakers also disagree with who should advise the state on a possible sale.
Leaders of South Carolina's House and Senate have hired a consulting firm-Virginia-based ICF International, which reportedly has been paid $200,000 for its services-to work up an appraised value for Santee Cooper, which partnered with holding company SCANA and its subsidiary South Carolina Gas & Electric (SCG&E) to build the nuclear plant. The Republican governor wants to sell Santee Cooper to pay back the utility's customers for the costs incurred from the failed project.
ICF, in an email response to POWER, did not want to comment on its role in a possible sale.
McMaster, however, in a Nov. 21 letter obtained by The State newspaper in Columbia, S.C., said "it does not appear that ICF typically offers, or is positioned to provide, comprehensive evaluation services of this kind." McMaster reportedly wants to hire Moelis & Co., a New York-based investment bank that has experience in utility deals. McMaster met with Moelis representatives in October and reportedly discussed a proposal for an appraisal from the group, but his office has declined to provide details, saying the information is proprietary.
While the governor and state leaders work out the details of a possible sale, lawmakers are expected to discuss the fallout from the V.C. Summer fiasco when the state's General Assembly reconvenes in January 2018. Talk is likely to focus on protecting utility customers of Santee Cooper and SCE&G; ratepayers already have shelled out billions of dollars over the past several years during the nuclear plant's construction. Lawmakers in September said they want an investigation into possible criminal activity involved with the project.
The U.S. Attorney's Office for the District of South Carolina in early September subpoenaed Santee Cooper, asking for documents from a Bechtel assessment of construction at Summer. A copy of the subpoena obtained by POWER in mid-September shows federal investigators asked for external audits of the project as far back as 2010. Investigators also asked for specific presentations to Bechtel, all e-mails related to the Bechtel report, details of the report's investigations and findings, and a list of those who received the report.
Santee Cooper also was sued in August of this year, charged with raising customer rates to pay for a suspended coal-fired power plant project.
The V.C. Summer project to add two Westinghouse AP1000 reactors at the existing nuclear site in Fairfield County, which currently has one 966-MW Westinghouse 3-loop pressurized water reactor and is licensed to operate until 2042, began in 2008. The project had an estimated price tag of about $9.8 billion. However, much like the troubled Vogtle nuclear plant project in Georgia, Summer was plagued by construction delays and cost overruns.
Westinghouse, due to problems with both Vogtle and Summer, filed for Chapter 11 bankruptcy in March 2017, citing its financial losses from the projects. SCANA in July decided to abandon the project after Santee Cooper's board voted to end all construction, and SCANA was not able to find another partner for the project. Though SCANA in August said it was withdrawing its abandonment request with the state Public Service Commission (PSC), in the event the project could be revived, it also said there was no plan to resume construction.
Toshiba, the parent of Westinghouse, in July agreed to pay $2.2 billion to SCANA and Santee Cooper to cap its liabilities from the project.
The State newspaper has reported that the governor's office has spoken with four utilities about buying Santee Cooper: Duke Energy, Southern Company, Dominion Energy, and NextEra. Sources told the newspaper those four also have inquired about purchasing SCANA, though it's not known whether any of those discussions have involved restarting the Summer project.
SCANA, whose stock has plummeted this year from a 52-week high near $75 to the $43 range-a 43% drop-has reportedly hired investment banker Morgan Stanley to investigate a possible sale. The Securities and Exchange Commission recently subpoenaed SCANA regarding the drop in the price of its stock, after a class-action lawsuit was filed on behalf of company shareholders who say SCANA made "false and misleading statements" about construction at Summer, leading to stock trading at "artificially inflated prices."
-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).
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