Reading the newspaper (or the cyber newsfeed) has been especially painful these last two weeks. Charlottesville… a shooting on King Street in Charleston… a hurricane in Texas… and countless (truly) articles about the demise of the SCANA/Santee Cooper nuclear plant. No silver linings in these events…
But also, if you will bear with me, some encouraging, inspiring and beautiful stories too.
First, the nuclear plant debacle continues to unfold. There are important lessons about how to avoid these types of train wrecks in the future, if we pay attention.
Both Governor Henry McMaster and Senator Lindsey Graham are publicly promoting the sale of Santee Cooper, our state-owned electric utility that was a 45% investor (with SCANA, at 55%) in the $9 billion hole in the ground in Jenkinsville. But, as this article from the Post and Courier reports, although two companies have expressed interest, neither is “viable,” according to (now former) CEO Lonnie Carter.
This next article begins to explain why no “viable” companies are interested.
From the article:
Industry experts have said Santee Cooper’s higher-than-average debt would make a sale challenging. The utility has $8 billion in debt — about half from the nuclear project — that would need to be refinanced. And because a private-sector owner wouldn’t be able to offer investors tax-free returns like Santee Cooper can now, the buyer would face even higher costs.
I’ll add one more salient fact. Santee Cooper is insolvent. The agency’s liabilities are greater than its assets. In ordinary language, it is broke – under water – to the tune of at least $2 billion. Anyone who is interested, including our governor and our senator, can find this out by looking at the utility’s 2016 financial statements.
So a conventional “sale” is simply not going to happen. But something must be done, and it will probably look more like a fire sale and give away, where assets are stripped out and sold, including the incomplete nuclear plant, and some of the debt is taken over by the state. Under any circumstance, in one configuration or another, South Carolina taxpayers will be on the hook for billions of dollars in losses for years to come.
There was a time, not long ago, when the utility was on solid financial ground. Its financial decline occurred with extraordinary speed over the last decade, under the current management and most of the current board.
As this next article from the Post and Courier reminds us, Santee Cooper’s abandonment of the nuclear project is not the first major miscalculation. Eight years ago, almost to the day, the agency threw in the towel on an ill-conceived coal plant on the Pee Dee River, after wasting a quarter of a billion dollars on land and plant parts.
All of this explains why, as this next article from the Post and Courier reports, CEO Lonnie Carter has announced his retirement.
Finding a new CEO will be no mean feat. From the article:
Carter’s replacement will be tasked with running an agency with a pile of debt tied to the nuclear project and an uncertain political future.
Re: the nuclear plant. We are now in the blame-assignment phase. As I reported in my last news summary, there is a lot of blame to spread around – from the Legislature, who set the stage 10 years ago for shifting the costs and risks from SCANA management and shareholders to its ratepayers, (and now are shocked that the utility did exactly that), to the Public Service Commission members, who approved one rate increase after another as costs skyrocketed, to the boards of both SCANA and Santee Cooper, who failed to protect shareholders, rate payers and the public from apocalyptically bad business decisions, to, again, the Legislature, who created the little known Office of Regulatory Staff (ORS) to protect ratepayers and utilities (at the same time), but failed abysmally to do either.
As this article from the Nerve explains, ORS had a job assignment that was impossible from the beginning. The creation of the new agency shifted the responsibility for oversight from the Office of Consumer Affairs where, according to the historical data, things were working fairly well.
Says the Nerve:
Clearly, the (old) system was working, despite the view that Consumer Affairs was underfunded. Why shift the representation of ratepayers to a new, conflicted agency that doesn’t even work on paper – unless that was the point? According to the House and Senate journals, not a single lawmaker spoke in opposition to Act 175 at any point in the legislative process.
That (creating an agency that spent more time doing the bidding of the regulated utilities than protecting the consumer) was exactly the point.
This final article, from today’s Post and Courier, provides an in depth look at how the plant construction proceeded over ten years, including stunning – almost unbelievable – revelations that plans for completion never existed, and that defective parts, work inefficiencies and “incompetence at every level,” plagued the project, and were largely ignored by management, from the beginning.
From the article:
The decade-long saga that led to the financial crisis now facing South Carolina is complex.
It includes corporate-friendly politicians, an ambitious for-profit utility, an untested nuclear design, utility regulators who didn’t raise questions, investors who had nothing to lose, a state-operated financial partner and a small state looking to be on the leading edge of a nuclear renaissance.
It is clear that no single change will avert future meltdowns of this sort – there are 20 or 30 things that must be changed.
The most important, and most difficult, is to end the too-close relationships between SCANA, a regulated monopoly, and the “corporate friendly politicians” who created the regulatory system and decided who would run it.
Re: Santee Cooper… the problem boils down to a massive public agency run by unaccountable insiders with carte blanche to do whatever they want with public assets. Even the fig leaf of SCANA oversight afforded by the Office of Regulatory Staff and the Public Service commission is absent with this now insolvent authority.
South Carolina is an unusual place. We consider ourselves politically conservative, and if electing Republicans indicates a belief in minimal government intervention and the power of free markets, we express that at the ballot box.
But we tolerate, and embrace, a political and economic system that more closely resembles something from Eastern Europe than Adam Smith’s “Wealth of Nations.” We are a place where major commercial sectors, notably transportation and energy, are either state-owned, and controlled by a small clique of political leaders, or where laws confer extensive protections and economic benefits on a few private corporations, whose campaign contributions flow back to said elected officials.
This political structure is best described as a “corporate state,” a form of government that has been criticized for the past century for exactly the types of abuses we are experiencing today. This is the fundamental problem we must correct, and the reason change will be so difficult. But if we ever had a shot at reform, it is now.
No more political philosophy! There was the eclipse, on Monday, which went off without a hitch. I was in Columbia for the Captain Sams Spit hearing and joined my brother on Main Street to witness it.
I can’t add anything to the commentary about this wonderful event, except to ask why no one mentioned the greatest American film ever made about an eclipse – the 1949 movie, “A Connecticut Yankee in King Arthur’s Court,” starring Bing Crosby, based on a novel by Mark Twain. Since I couldn’t find a clip of the eclipse scene, here is a link to the whole movie. You may have to watch an ad first, but it’s worth it. Go to 1’38” mark on the movie (if you don’t want to watch the whole thing). And the quality of the video is very good!
This next piece from the New York Times makes the point that, unlike King Arthur, we can rely on modern science to predict eclipses with remarkable accuracy. Millions of people studied those predictions and made plans accordingly. When it comes to eclipses, we trust science and scientists.
Not so, says the author, when it comes to climate change, a phenomenon far more serious, with potentially catastrophic consequences. He urges us to drop the ideology, the conspiracy theories and the politics around climate science and confer the same respect to the volumes of research that have predicted – and so far, with disturbing accuracy – the consequences of failing to rein in our use of fossil fuels.
From the article:
Thanks to the work of scientists, people will know exactly what time to expect the eclipse. In less entertaining but more important ways, we respond to scientific predictions all the time, even though we have no independent capacity to verify the calculations. We tend to trust scientists.
For years now, atmospheric scientists have been handing us a set of predictions about the likely consequences of our emissions of industrial gases. These forecasts are critically important, because this group of experts sees grave risks to our civilization. And yet, when it comes to reacting to the warnings of climate science, we have done little.
If you respect and honor the scientists who did this work (on eclipses and other celestial phenomena), then spare another moment to think about the scientists whose work is under attack today, and why.
In a similar vein, this next article, from the Washington Post, reports on recent research that reveals the almost inconceivable diversity and complexity of life in soil.
From the article:
The sheer vitality of it is mind-bending: A teaspoon of good loam may contain a billion bacteria, yards of fungal strands, several thousand protozoas and a few dozen nematodes, according to Jeff Lowenfels, a garden writer based in Anchorage and co-author of “Teaming With Microbes.”
The author advocates “low-impact” farming and gardening, that protects the life forms and the networks of energy and information in healthy soil. Not only is this a solid strategy for human health, it benefits the planet by sustaining productivity and diversity, and by reducing carbon emissions associated with manmade fertilizers.
On the subject of sustaining diversity, this next article from the Island Packet reports that Beaufort is on the way to becoming the first county in South Carolina to ban single use plastic bags, the production and disposal of which is a menace to biological diversity on the planet, and particularly in the ocean. The Conservation League’s Rikki Parker has worked with citizens across the county in this worthy effort. Good for Beaufort!!!
Here’s another hemispheric phenomenon. This article from the Cornell Lab of Ornithology has the coolest map of bird migration ever devised! Even if you don’t want to read the article, click on the link and look at the map, which is an animation of the annual movement of migratory birds between South and North America, with important information about where the hotspots are (the Southern Appalachians, among others…) and the need to protect those habitats. Too few people know that this semi-annual miracle called migration occurs!!
Finally, I promised beauty and here is one more episode of it. This article, from Fox News, includes a video of a white moose in Sweden that was caught on camera taking a drink and fording a small pond. It’s the perfect antidote to the less savory news of the week.
Enjoy nature’s beauty, keep the faith, and have a great week!