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.