| Privatization benefits draw statewide debate AIKEN - The Santee Cooper public power utility earned a robust $1.1 billion in 2003, the most since it opened in 1942. And with South Carolina growing, revenue at the state-run utility is likely to continue to rise. As it has in the past, the company's success has brought talk about privatizing the quasi-governmental energy producer, which is a small-scale version of the Tennessee Valley Authority, the sprawling, multistate utility that helped industrialize the mid-South by providing cheap electricity. Privatizing Santee Cooper, which generates power with coal-fired plants and hydroelectric dams, is an idea some observers say would create a more competitive outfit that would put more money in state coffers. But officials at the utility in Moncks Corner, S.C. - and the small-town and rural electric cooperatives that buy its energy - say this is a worn out and ill-conceived proposition that would only drive prices higher for customers, including 41,000 in nine counties who get power from the Aiken Electric Cooperative Inc. Fueling some of the speculation is Gov. Mark Sanford's belief that the private sector can do business more effectively than the state. The governor has said nothing publicly about privatizing Santee Cooper, but his office said he was willing to entertain the idea. "Any discussion that's focused on maximizing value and efficiency to the taxpayer is a good discussion," said Mr. Sanford's spokesman, Will Folks. The governor has had ample opportunity to study the idea, said Ed McMullen, the president of the South Carolina Policy Council, a conservative Columbia think tank. It gave Mr. Sanford a copy of its 1998 economic analysis, which says Santee Cooper places an unfair tax burden on South Carolinians. The report also said Santee Cooper creates economic inequality between those who benefit from the utility's cheap power and those who are forced to buy more expensive power from commercial utilities. Mr. McMullen stands by the report's findings. "The case is even stronger today," he said. "In Santee Cooper we have a major asset that the state of South Carolina owns, but only a few South Carolinians benefit from." Santee Cooper was built with federal aid and has been maintained by its revenue, receiving nothing from the state, said Willard Strong, a company spokesman. It provides energy directly to about 138,000 customers in Berkeley, Georgetown and Horry counties, the cities of Bamberg and Georgetown, more than 30 industries and a military installation. It sells power to more than 625,000 customers indirectly through the state's 20 nonprofit cooperatives. All told, the company provides energy to an estimated 1.8 million customers in South Carolina, nearly half its population. Cooperatives that buy power from Santee Cooper almost uniformly oppose privatization. "It would hurt the people who need it the most," said Gary Stooksbury, the CEO of the Aiken Electric Cooperative. Electrical cooperatives were set up as part of the New Deal during the early 1930s, when the nation's economy was strapped and power providers refused to reach out to rural areas because of the expense, Mr. Stooksbury said, pointing out that the state's cooperatives provide power to 70 percent of the state's land. Privatizing Santee Cooper would be a costly and complex process. For one thing, it's carrying roughly $3 billion in debt, said Lonnie Carter, the president and CEO of the company. "For a private company to survive and make a profit, that means rates have to go up substantially," he said. The policy council and other proponents of privatization disagree. The council's report found that the 1 percent of Santee Cooper's revenue that it gives to the state is far less than what other private companies are paying. In 1994, for example, privately owned utilities in South Carolina paid an average of 9.6 percent of their revenue to the state. If Santee Cooper paid that percentage, it would have given the state $57.6 million instead of the $6.1 million it actually forked over, the report found. Proponents of keeping Santee Cooper in government hands argue that it keeps rates low, which attracts industry that otherwise wouldn't come to South Carolina. For now, at least, the 11-member board appointed by the governor doesn't appear interested in the issue. "It's not even being considered," said Clarance Davis, a Columbia attorney who serves on the board. Reach Josh Gelinas at (803) 648-1395, ext. 113, or josh.gelinas@augustachronicle.com.
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