Santee
Cooper's average rates are below the average for the co-ops,
investor-owned utilities and other public power companies, the study
said.
COLUMBIA - Santee Cooper, the
state-owned electric utility that serves most of Horry and
Georgetown counties, is the state's most valuable asset, according
to an investment firm's report released Thursday.
The 60-page report from Credit Suisse First Boston said the state
might make money from selling the utility, which it valued at $5
billion, but did not make recommendations.
The analysis outlines pluses and minuses of selling the utility's
generating facilities, selling the whole utility and taking it
public, but it does not give numbers for those alternatives.
Other findings suggest the utility could pay more money into the
state general fund when compared with taxes that private utilities
pay.
The report was requested by Gov. Mark Sanford but paid for by the
utility. It cost $150,000. The governor has not yet read the report
and could not comment on it, his spokesman said.
Santee Cooper Chairman Guerry Green said the study is similar to
three others he has seen in the past few years, but he was surprised
to find the utility's value so high.
The amount does not take into account the intangible value in the
form of economic development Santee Cooper brings to the state,
Green said.
"You can't quantify in dollars the value of Santee Cooper to the
state," he said.
The utility is the third-largest public power company in the
country. Besides its direct customers in Horry, Georgetown and
Berkeley Counties, it sells directly to some large industries, to
electric co-ops and to some towns including Georgetown.
Santee Cooper has been the subject of controversy for the past
two years, since Sanford asked it to provide some money for the
general fund in addition to the 1 percent of its revenue that it
currently contributes to the treasury.
The utility's board agreed to give $13.5 million from the sale of
surplus property, but that angered legislators. When Sanford
abruptly fired the board's chairman only a year after appointing
him, lawmakers filed bills seeking to remove the governor's power to
fire board members without cause and to prevent the sale of assets
without specific legislative permission.
Those bills are now the subject of disagreement because they give
the electric co-ops four seats on the 11-member board.
The chairman's firing led to a downgrading of the utility's
outlook by Fitch Ratings, and on Tuesday, Standard & Poor's
downgraded its outlook for the utility because it has so many co-op
seats on the board.
Green said it is time to end the controversy by letting board
members serve their seven-year terms.
"The governor and the legislature need to lay down their swords
and meet in the middle," Green said. "The cure is worse than the
disease."
Green also said that after much talk about the utility's rates
and how they compare, he was pleased that "we certainly fared
favorably among all the peer groups."
Santee Cooper's average rates are below the average for the
co-ops, investor-owned utilities and other public power companies,
the study said.
It also has the lowest rates in the region, compared with
competitors such as Duke Power, Progress Energy, Scana and Southern
Co.
Some of the utility's competitors say Santee Cooper has an unfair
advantage because it does not have to pay taxes.
The Credit Suisse study said a comparable private utility would
pay about $20 million a year in dividends to investors. Because the
utility's owners are the state, it could be expected to pay the $20
million to the state.
Santee Cooper's 1 percent revenue payment has averaged $10
million.
Green said the only way to pay that much more is to raise rates,
but there is no support for doing that.
"The alternative is to pay a dividend with economic development,"
he said.
State Sen. Bill Mescher, a former Santee Cooper president and
backer of removing the governor's power to fire board members at
will, said he had not seen the report but is suspicious of its
findings. Consultants can give the answer desired by the body that
hires them, he said.
Santee Cooper "doesn't make any money, they're not supposed to
make any money," and should not be viewed in the same light as a
private utility, said Mescher, R-Pinopolis.
The report included a "history and analysis" by Santee Cooper
board member Keith Munson. The essay said that even though Santee
Cooper was built with federal money, the state paid for it because
it could have used that money for something else.
"I've never heard that analysis before," Mescher said.
Munson also said the utility has served the purpose for which it
was created.
Green said he and other board members did not know about Munson's
participation in the Credit Suisse report and had not approved it.
They divorced themselves from it by issuing a statement saying it
did not represent board or management opinion.
