Here's the issue: SCANA (the parent company of South Carolina Electric and Gas) and Santee Cooper (the state-owned utility that provides power for 11 local electric co-ops) tried to build two nuclear reactors and failed. They just pulled the plug on the projects costing $9 billion and 5,000 jobs - so far.
Here's the question: Who is going to pay for this disaster?
This is obviously a huge and complex mess and the answer to 'who pays' will be an ongoing issue for years to come, and it directly affects the family budget of 2.2 million SCE&G and co-op customers in all 46 counties. The bill could be as high as $9,000 for a family of four.
Over the coming months and years, there will be a host of accusations, finger pointing, charges and counter charges, lawsuits and counter suits. But, there are two things we know now for certain.
The people with absolutely no responsibility for this disaster - the rate payers - are being asked to pay billions of dollars, perhaps for as long as 60 years.
Those who are responsible - SCANA, Santee Cooper and the politicians that passed legislation to enable this to happen (and got paid for it) - will all be blaming each other when they are all at fault.
As this issue continues to unravel, there will be lots of new information about who is responsible for what. Based on what we know now, here's what I believe should be done.
SCANA and SCE&G
Over the last ten years, SCE&G has hit their customers with nine rate increases and customers are already paying 20 percent of their bill to pay for the nuclear facilities - among the highest rates in the country. Now, they want to stick rate payers with a bill of $2 billion (others say the final number could be as high as $8 billion) to cover the cost of their failure over the next 60 years.
What they should do: The entire board of directors and senior management should resign. They should return all pay raises, bonuses and stock options they received since the project began in 2008. Last year the top five senior managers made on average $2.8 million and CEO Kevin Marsh made $6.1 million and $28 million over the last five years. When they leave, they should get no golden parachute or severance of any kind. To avoid disruption at the company, it could be done over time but completed within one year.
They should also roll back their rates to consumers to 2008 levels, plus inflation. And, how will they pay their debts? That's their problem; it's called capitalism.
Santee Cooper is owned by the state of South Carolina and provides electrical power to the 20 local consumer owned electrical cooperatives. It owns 45 percent of the failed nuclear project and SCANA owns the other 55 percent. They have imposed numerous rate increases on their 1.5 million customers via the local co-ops, and since the project has been cancelled, they announced they will raise rates another 10 percent in December. They have worked hand in glove with SCANA on every aspect of this project - most notably on spending vast sums of cash to secure the support of the legislators and other politicians they needed to make this all happen.
What they should do: The entire board of directors and senior management of Santee Cooper should resign. They should return all pay raises and bonuses they received since the project began in 2008. Last year the top five senior managers (state employees) made on average $321,682 and President Lonnie Carter made $540,929. When they leave, they should get no golden parachute or severance of any kind. To avoid disruptions at the company, it could be done over time but completed within one year.
They should also roll back their rates to 2008 levels, plus inflation. And, how will they pay their debts? Serious consideration should be given to selling Santee Cooper.
S.C. Public Service Commission
There are seven Public Service Commissioners who are in charge of regulating the public utilities. They have approved the overall project and passed on each of the rate increases by SCE&G.
What they should do: All the commissioners should resign and return all pay raises they received since the project began in 2008. Last year the seven commissioners had an average salary of $109.407.
The whole Public Service Commission should be reformed by the legislature to prevent this type of oversight failure in the future.
The S.C Legislature
In 2007, they passed the Base Load Review Act that allowed utilities to charge consumers in advance for the construction of the nuclear facilities plus guaranteeing them a 10.25 percent profit - even if the project failed.
The bill S.431, passed the Senate in just two days without a single recorded vote. The House passed it in three days by a vote of 104-6 and it became law two weeks later without Governor Sanford's signature. (If the governor does not veto a bill, it automatically takes effect in two weeks.)
According to a column in The State, the lead senator received $74,750 in campaign contributions from electric companies and "the electric utilities and the nuclear industry made 619 contributions totaling $514,956 to lawmakers in the legislative session leading up to the vote."
In response to the current crisis, 27 senators and legislators have now formed a new Energy Caucus to investigate what happened and develop recommendations. Ironically, a number of the legislators in the Energy Caucus were original sponsors of the legislation.
What should they do - All legislators should 1) donate all campaign contributions they have received since 2007 from SCANA, Santee Cooper and the co-ops to the charity of their choice, 2) publicly disclose all retainers, consulting contract and other payments they or immediate family members have received from SCANA, Santee Cooper and the co-ops. One legislator has said that he will return some campaign contributions.
And, a recent Post and Courier story said all the members of the S.C. congressional delegation in Washington are getting paid as well with recent political contributions averaging $70,000 each. They should give this money to charity. Also, three congressmen own stock in SCANA; they should sell it and give all increases in value since 2008 to charity.
Gov. Henry McMaster
Published reports are that "according to McMaster's financial disclosures, he's received tens of thousands of dollars from the state's electric cooperatives. McMaster has also received tens of thousands of dollars from donors affiliated with SCANA." Specifically, in first quarter of 2017, he has received $33,500 from the co-ops and in June, he received a $2,500 personal contribution from SCANA CEO Kevin Marsh.
To date, he has only said he would follow the legislature recommendations and he's organizing a job fair for the 5,000 people who lost their job.
What should he do - He should lead - plain and simple. First, he should donate to charity all of the campaign contributions he has received from the utilities since 2007. Thus far, he has said that he would see what the Legislature comes up with and support their recommendations. As so many of the legislators are tainted by the utilities money, he should appoint a special independent commission to conduct a complete investigation, presided over by a chairman that is an outside expert.
Is this tough - sure it is.
But, it's nowhere near as tough as it will be for South Carolina families that will be forced to pay billions of dollars for the mistakes of others. How many families can afford to pay a new bill of $9,000?
We need big change and real reform in S.C. politics - and this is a good place to start.
This is as much a political scandal as a utility scandal as the politicians enabled it to happen - and got paid a lot of money in process.
It doesn't have to be this way.
We need big change and real reform - NOW.
Phil Noble has a technology firm in Charleston, is founder of World Class Scholars and writes a weekly column for the S.C. Press Association. Contact him at firstname.lastname@example.org and get his columns at www.PhilNoble.com.