Santee Cooper operates as a self-funded, independent electric and water utility that each year contributes 1% of gross budgeted revenues (more than $17 million in 2020) to the state general fund to help pay for vital priorities such as education, transportation and public safety. As a state-owned utility, Santee Cooper has a responsibility to South Carolinians to maintain financial health that withstands the test of time.
We are holding prices stable. Specifically, we have committed to not increase base rates for the vast majority of our customers from August 2020 through December 2024 and to hold normally adjustable components of those rates, such as fuel charges, stable with Reform Plan projections. For residential and commercial customers, that means fuel charges will actually decrease 7% from 2020 through 2024. Beyond 2024, we believe our efficiencies and savings will help us continue to offer customers the lowest typical monthly bill among large utilities in South Carolina.
We are reducing our debt. Since 2017, Santee Cooper has paid off over $1 billion in debt, and debt paydown will accelerate as we move to cheaper generation with more solar power. We anticipate paying off another $3.6 billion, an amount equal to the debt related to our failed V.C. Summer nuclear project expansion, in 12 years, in part through debt management strategy and operational savings.
We are returning money to customers. As part of a landmark settlement reached earlier in 2020, ratepayers who were Santee Cooper customers between Jan. 1, 2007 and Jan. 31, 2020 will receive refunds from a Common Benefit Fund of $520 million ($320 million of that provided by Dominion Energy). This settlement is an important step as we turn the page on the past and focus on a leaner, greener and more efficient electric system.
We are maximizing value for South Carolina. Through selling surplus assets, expanding strategic partnerships, increasing operational efficiency and reducing overhead costs, Santee Cooper will improve our overall efficiency and financial health.
(August 5, 2020) Moody’s Investors Service calls the Cook settlement, approved July 20, “a positive development for Santee Cooper as it places an upper limit on the uncertainty associated with the lawsuit.”
The settlement resolves the matter of Cook et al, involving costs associated with the failed V.C. Summer expansion. Also, as part of the settlement Santee Cooper and Dominion Energy (parent of former V.C. Summer majority partner SCANA) resolved all matters between them related to the project.
Moody’s noted that Santee Cooper will provide cash payments to a settlement fund over the next three years, with $65 million in each of 2020 and 2021, and $70 million in 2022, “which alleviates the cash impact.” Dominion is providing another $320 million to the settlement fund.
The settlement also provides that Santee Cooper will hold most customer rates to levels reflected in the Reform Plan, for the next 4½ years. Moody’s notes that “as part of its submitted reform plan, Santee Cooper had already projected not having any rate base adjustments through 2027 for retail customers. Since fuel costs have declined relative to what was previously considered in the reform plan, Santee Cooper anticipates the lower operating costs will help it mitigate the rate freeze impact.” Read the full Moody’s report.
(July 21, 2020) Following Justice Toal’s approval of a landmark settlement over costs related to the failed V.C. Summer nuclear project, Santee Cooper’s Board of Directors will meet July 31 to consider authorizing management to take actions necessary to comply with that settlement.
The settlement provides a $520 million refund to ratepayers who were customers between Jan. 1, 2007 and Jan. 31, 2020, with the project’s majority partner Dominion Energy funding $320 million of that and Santee Cooper, $200 million. The settlement also provides a nearly 4 ½-year rate freeze, through 2024. That rate freeze holds most customer base rates stable and holds normally adjustable charges, such as the fuel charge, to levels set out in our 2020 Reform Plan. As fuel charges are projected to decrease, that means (for example) that related charges for residential and commercial customers will drop 7% from 2020 through 2024.
The freeze affects all residential, commercial and lighting customer rates, and all other customer rates as listed on Schedule B in the Customer Settlement Agreement. It does not apply to certain municipal customers who are served under specific contracts, or to rates or riders not listed on Schedule B. Rates for Central Electric Power Cooperative, which purchases electricity wholesale from Santee Cooper on behalf of the state’s individual electric cooperatives, will be held to terms in the Reform Plan. Read the full settlement.
(June 19, 2020) Santee Cooper has signed a Memorandum of Understanding with Dominion Energy South Carolina, and another with Southern Company, seeking to identify operating efficiencies with each utility that will yield savings for customers.
Santee Cooper is looking for savings by working jointly in areas such as right-of-way maintenance, fleet management, dispatch of generating units and technical services.
Already, Santee Cooper and Dominion are conducting a pilot tree-trimming operation. We have identified common corridors where we each maintain transmission right-of-way and divided up planned work in those areas to avoid each of us deploying equipment and personnel to the same corridors. The pilot began in July, will last a few weeks and will help us identify potential for longer-term vegetation management cooperation.