NextEra Energy announced on February 11 that its bid to buy South Carolina’s public utility, Santee Cooper, is the “recommended purchase proposal” following a formal bid invitation called for by the state’s General Assembly in May 2019 (NN, June 2019, p. 9). Competing with NextEra’s purchase offer is a reform plan put forward by Santee Cooper in an attempt to avoid a sale as the utility continues to grapple with the failed Summer-2 and -3 nuclear construction project and the $3.6 billion in debt incurred before the project was halted in July 2017.
A report from the South Carolina Department of Administration published on February 11 outlined the competing plans and factors that the General Assembly may want to take into consideration as it mulls the plans. A third option, a proposal by Dominion Energy to take over the management, but not the ownership, of Santee Cooper was also evaluated.
NextEra issued a statement, saying, “We view South Carolina as an extremely attractive state to do business in and look forward to being considered to deliver a more affordable, highly reliable, and cleaner energy future for South Carolina and Santee Cooper customers. Our proposal to purchase Santee Cooper’s assets reflects a total value to the state of South Carolina, its citizens, and Santee Cooper’s customers of approximately $19 billion.” That proposal includes the elimination of 100 percent of Santee Cooper’s approximately $7.9 billion of debt, including defeasance costs, and the elimination of approximately $3.6 billion of future interest payments associated with the Summer-2 and -3 nuclear project.
Santee Cooper’s reform plan would pay off $3.6 billion in 12 years and “dramatically increases stakeholder input and transparency.”
“Our goal is to build a brighter future for South Carolina,” said Mark Bonsall, president and chief executive officer of Santee Cooper. “We acknowledge our role in the V. C. Summer-2 and -3 project, which we shut down. We apologize that we had to do so, are working hard to make it up to customers and the state, and this reform plan is a huge step forward in that effort.”
The reform plan mentions the possibility that, contingent on other capacity plans, the former Summer-2 and -3 site could host a natural gas combined-cycle plant by 2027, taking advantage of the transmission system upgrades that were installed in anticipation of the nuclear units.
The site currently contains equipment left over from the construction project. Who will benefit from an eventual sale of that equipment has been the subject of litigation between Westinghouse, the lead contractor for the project, and Santee Cooper, and a settlement agreement was put before the Santee Cooper board of directors on February 6.
The amount that Santee Cooper could recoup from a sale of the equipment is uncertain, especially if the proceeds are split between Westinghouse and the utility. Santee Cooper’s reform plan states, “In the near term, Santee Cooper plans to deploy... $425 million of assumed proceeds from the sale of nuclear equipment in 2021 for the continued accelerated reduction of debt.” However, an appendix to the plan acknowledges that “the [Department of Administration’s] Conforming Assumption Case assumes $150 million proceeds will be available to Santee Cooper from the sale of V.C. Summer Units-2 and -3 equipment.”