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The New Media Department of The Post and Courier

TUESDAY, MARCH 22, 2005 12:00 AM

Stakes high in Santee Cooper fight

Lawmakers moving to cut Sanford's power over utility

BY KYLE STOCK
Of The Post and Courier Staff

The protracted tug-of-war between Gov. Mark Sanford and the General Assembly over control of Santee Cooper has seemingly tipped in favor of the Legislature after some political wrangling by Sen. Glenn McConnell.

McConnell, the Senate president pro tempore, filed a bill last week that would give lawmakers rather than the utility's board the power to approve the sale of Santee Cooper property. It also would let Santee Cooper ratepayers file lawsuits alleging mismanagement against the Moncks Corner-based utility's board members, a first.

Moreover, McConnell's proposal, like a number of others on the table in Columbia, would assign Santee Cooper board appointments to a five-person committee and prohibit the governor from ousting directors without cause.

McConnell also tightened the Senate's grip on the current board of the state-owned utility. Typically, a full Senate committee of 20-plus members confirms the governor's board appointments. But last week McConnell gave the job to a subcommittee of five lawmakers, four of whom have sponsored bills that would curtail the governor's right to appoint and replace directors at will. Five of the board's 11 members are up for confirmation in the Senate.

Beyond political muscle, the oversight and fiscal soundness of the massive utility, which serves 40 percent of the state's electricity customers, are at stake in this battle. There have been few changes in the way Santee Cooper is run since the utility was created in 1939. Moreover, Santee Cooper still enjoys some of the best credit ratings for a utility in the country.

But in recent years some people, including former Santee Cooper executives and Wall Streetanalysts, have said the governor's office has put too much political pressure on the utility.

Sanford has embraced a policy initiated in 1999 of changing board members at will. He also has suggested that Santee Cooper's low rates are a form of subsidy and has pressured the utility to send more money to the state treasury.

In December, just 20 months after appointing him to the post, the governor ordered then-chairman and former Santee Cooper Chief Executive Officer Graham Edwards off the board. Days later, credit rating firm Fitch Inc. lowered its outlook on the utility's debt, citing the changes.

There also was a stir last year when Santee Cooper directors approved a sale of surplus land and requested that a third-party consultant study the value of the authority. Lawmakers suspected Sanford of ordering his board appointees to privatize Santee Cooper, accusations that the directors and Sanford denied.

McConnell said Monday his bill would end all of this controversy, dispel questions about Santee Cooper's future and make the utility more businesslike and less susceptible to political pressures.

"This is not a reaction or an attempt to get into a challenge with the governor. It's an attempt to fix a simmering debate that needs to be addressed," McConnell said. "It's a middle ground ... and I think it gets us all to the finish line."

An almost identical bill in the House won 96 sponsors, and McConnell said he thinks the Senate will vote overwhelmingly in favor of his proposal. "I think (Sanford) would tend to be comfortable with this," McConnell said.

But Will Folks, a spokesman for Sanford, called McConnell's proposal "pre-emptive, knee-jerk" legislation.

"The way this bill reads, if you even think the word 'privatization' or think the term 'more dollars to the general fund,' you're going to be sued," Folks said. "This would make it near impossible to find capable individuals willing to serve on this board."

Santee Cooper and its directors both said McConnell's bill would be "severely detrimental" to the utility's operations. The board spent several hours behind closed doors Friday discussing the implications of the proposal.

"We just feel that the liability provision would really hamper the board's ability to direct," said spokeswoman Laura Varn.

Guerry Green, chairman of the board, said some of the directors likely would resign if McConnell's measure passed. "Everything you worked for all your life would be up for grabs if somebody wanted to sue you," he said.

Before lawmakers move any legislation forward, however, they plan to hear from Santee Cooper customers. The subcommittee has scheduled three public hearings starting March 31 and is planning a fourth for taxpayers to weigh in on Santee Cooper service and recent changes to its board.

The Senate subcommittee that McConnell named last week also must decide whether to approve five current board members. Several of the lawmakers in the group have called Sanford's board movements heavy-handed.

Sen. William Mescher, a former chief executive of Santee Cooper and a member of the subcommittee, said there were several directors he would not vote to confirm.

"The board, I think, is irresponsible," Mescher said. "Everything Sen. McConnell has got in (his bill) is (designed) to eliminate a problem that we see occurring because of this board."

Santee Cooper receives no tax support, and, as a public authority, is largely exempt from state taxes. It directs 1 percent of its gross operating revenue, about $10.5 million a year, into the general fund. Santee Cooper electricity is about 30 percent cheaper than that of private-sector companies like Scana Corp., which makes it a powerful economic development tool for the state.


This article was printed via the web on 3/22/2005 10:32:48 AM . This article
appeared in The Post and Courier and updated online at Charleston.net on Tuesday, March 22, 2005.