Taxpayer, ratepayer tab totals $9 million so far for review of secret Santee Cooper bids
By Rick Brundrett
Eight private firms hired by the state to evaluate proposals for the sale or management of state-owned utility Santee Cooper have charged a total of more than $9.2 million – $5 million of it covered by taxpayers – for their work, newly released records show.
And the overall bill to ratepayers with Moncks Corner-based Santee Cooper and the state’s electric cooperatives, which collectively serve about 2 million residents, could grow by about $11 million when the selected proposals are presented to the Legislature.
The S.C. Department of Administration (SCDOA) has a special $20 million pot to cover the review costs. It includes $5 million from state budget surplus funds for this fiscal year, which ends June 30; and a $15 million transfer from Santee Cooper, of which $10.5 million is covered by the state’s 20 electric cooperatives, which receive power åfrom Santee Cooper.
Under a joint resolution passed last May by the Legislature, the SCDOA had a deadline of Wednesday last week to present one sales bid and one management proposal, along with a restructuring plan by Santee Cooper, to the 170-member General Assembly, which is supposed to choose among the options.
The law gives the SCDOA a 60-day extension to file the proposals if requested by the department, which was done in a letter last Friday from agency director Marcia Adams to Sen. Hugh Leatherman, R-Florence, who is the Senate Finance Committee chairman; and Rep. Murrell Smith, R-Sumter, who is the House Ways and Means Committee chairman.
As The Nerve reported last year, there is plenty of secrecy built into the law. Although the SCDOA is a Cabinet-level agency under Gov. Henry McMaster, who has publicly pushed to sell Santee Cooper, neither the governor nor his staff can have “access by any means” to “information obtained” during the department’s review process. Bidding regulations under the state procurement code that “conflict with the provisions of this joint resolution are hereby suspended,” according to the law.
And even after legislators receive the SCDOA’s recommendations, the public could receive limited information. The law says certain information that could be released under the state’s open-records law “must not be released without the written permission of the entity whose bid or proposal was recommended.”
Discussions about selling Santee Cooper intensified after the 2017 collapse of the $9 billion V.C. Summer nuclear project in Fairfield County, a joint endeavor of the utility and then-South Carolina Electric & Gas, which later was acquired by Virginia-based Dominion Energy.
The Nerve last year revealed that Santee Cooper from August 2010 to April 2018 approved millions in grants and loans for economic development projects statewide while accumulating billions in debt for the failed nuclear project.
The Nerve recently submitted requests under the S.C. Freedom of Information Act to the SCDOA and Santee Cooper for contracts, payments records and other information related to the hiring of outside firms to evaluate sale and management proposals involving the utility.
Following is a breakdown of the $9.28 million charged by the eight firms as of Jan. 2:
Gibson, Dunn & Crutcher, a Los Angeles-based international law firm: $3,880,289.07;
Moelis & Company, a New York-based global investment bank: $3,819,838.15;
Energy and Environmental Economics, a San Francisco-based consulting firm: $1,127,754.14;
Black & Veatch Management Consulting, based in Kansas: $302,005.55;
Scott Hempling, Attorney at Law LLC, based in Maryland, specializing in public utility regulation: $66,782.94;
Pope Flynn, a Columbia-based law firm specializing in public finance: $65,020.52;
Craver Law Firm, based in Charleston, hired to provide legal services related to property matters: $17,755; and
Montgomery Willard, a Columbia law firm hired to provide legal services related to personnel issues: $7,457.50.
In its agreement with the SCDOA, the Gibson law firm noted it is “prepared to establish a hard fee cap” of $6 million for its services. Under its agreement, Moelis & Company will receive a monthly $250,000 retainer fee for a “minimum period of six months,” plus a separate “report fee” totaling $3 million, according to its agreement.
Total compensation for Energy and Environmental Economics is capped at $1.48 million, with hourly rates ranging from $235 to $575, under its contract. Black & Veatch will be paid a fixed $300,000 fee, plus travel-related expenses, for completing “primary priority tasks”; and its “standard rates” for finishing identified “optional” tasks, according to its agreement.
The agreed-upon hourly attorney rates for the hired South Carolina law firms range from $250 to $450, under their respective agreements.
At least one of the South Carolina firms has done business with the state in the past, according to records with the S.C. Comptroller General’s Office. The Montgomery Willard firm, whose members include Mike Montgomery, who served on the Richland County Council and the Richland District 2 School Board, was paid a total of nearly $460,000 from fiscal 2009 through last fiscal year by several state agencies, most of it from the S.C. Forestry Commission, records show.
Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or firstname.lastname@example.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.