Duke Energy Corp. confirmed Jan. 15 that it submitted an offer to acquire South Carolina state-owned utility Santee Cooper as lawmakers evaluate strategic options for the company.
"Duke Energy has a keen interest in the economic vitality of South Carolina, given our more than 100 years of history in the state," the company said in an email. "The governor requested Duke Energy, along with other companies, evaluate options for a potential acquisition of Santee Cooper. After a thorough evaluation, Duke Energy has submitted a proposal through the state's process for consideration."
South Carolina Gov. Henry McMaster has publicly pursued the sale and privatization of Santee Cooper since the July 2017 abandonment of the more than $9 billion V.C. Summer nuclear expansion project.
A newly formed committee of the South Carolina General Assembly in mid-October 2018 agreed to hire a global consulting firm to review nonbinding bids for Santee Cooper. The decision on whether to sell Santee Cooper rests with the full General Assembly.
Santee Cooper is a government-owned electric and water utility that also owns land and lakes, which could present a hurdle for a private company.
"They're structured quite differently as a public power entity compared to a private entity such as ourselves," Duke Energy Executive Vice President and CFO Steven Young said in February 2018 interview. The CFO also acknowledged consistencies between the companies.
Charlotte, N.C.-headquartered Duke Energy operates and provides electricity service in South Carolina through subsidiaries Duke Energy Carolinas LLC and Duke Energy Progress LLC.
Richmond, Va.-headquartered Dominion Energy Inc. declined to comment on whether it submitted a bid for Santee Cooper, known legally as South Carolina Public Service Authority.
"We have said that we have no interest in buying Santee Cooper but have said we're interested in a management proposal," Dominion Energy spokesman Ryan Frazier said in a Jan. 15 email.
In a late October 2018 filing with the Public Service Commission of South Carolina, Dominion Energy offered to operate and manage Santee Cooper. "By operating and managing Santee Cooper as part of its extensive utility operation, Dominion can achieve efficiencies, rationalize structures, and generate extensive economies of scale," the company wrote.
Since Santee Cooper is not regulated by the commission, Dominion said its offer is solely for informational purposes.
"We would like to offer a proposal to Santee Cooper to enter into a unique management arrangement that we believe will save Santee's electric customers hundreds of millions of dollars in overhead, fuel and capital related costs, providing significant cost savings on an ongoing basis for years to come," Dominion Energy Chairman, President and CEO Thomas Farrell II wrote in a letter to Santee Cooper interim President and CEO James Brogdon Jr. "Acceptance of this proposal would preserve South Carolina's ownership of Santee Cooper's valuable assets, thereby keeping Santee Cooper an independent, state-owned entity focused on serving its electricity customers."
The offer was made as part of Dominion's motion to dismiss an "eleventh hour" request by Santee Cooper for a portion of the benefits in Dominion's now-closed acquisition of SCANA Corp. SCANA subsidiary South Carolina Electric & Gas Co. partnered with Santee Cooper on the scrapped V.C. Summer reactors.
NextEra Energy Inc. also is reported to have an interest in purchasing Santee Cooper.
"It's been no secret that if there is [a request for proposals] on Santee, that we would have an interest. And so I think I'll stop it at that," NextEra Chairman, President and CEO Jim Robo told investors on an October 2018 earnings call.
NextEra declined to comment on whether it submitted a bid for the utility.
Southern Co. also has been identified as a potential suitor, but the company did not immediately respond to a request for comment.