By RICK BRUNDRETT
As state-owned utility Santee Cooper was racking up billions in debt – which ratepayers are expected to shoulder – for the failed V.C. Summer nuclear project, the company’s top executives were raking in huge bonuses and salary hikes.
More than $4 billion in bonds that were sold to finance the biggest financial flop in the Berkeley County-based utility’s history will have to be paid back with interest over years – to the tune of $200 million to $300 million annually.
But those I.O.U.’s are only part of the company’s overall debt load, which company records show stands at more than $15 billion. That tab will be paid back over 40 years, starting last year with payments totaling nearly a half-billion dollars.
And that means Santee Cooper’s customers likely will face rate hikes – how much is unknown – in the coming years.
Meanwhile, from 2009 through 2016 as the V.C. Summer project costs were escalating and construction deadlines were missed, the utility paid out a total of $5.6 million in bonuses to 15 executives, company records show.
Of the total bonus pool, $70,648 over the eight-year period was directly tied to the nuclear project, more than half of which was paid to recently retired president and CEO Lonnie Carter.
Carter received the highest total annual bonuses; in 2015 and in 2016 he was paid more than $330,000 in bonuses, which represented more than 60 percent of his salary for those years. During the 2009-16 period in which the V.C. Summer project was active, his yearly salary jumped 34 percent, from $404,756 to $540,929.
Besides bonuses, Santee Cooper’s top executives also received, according to a company spokeswoman, annual car allowance and life insurance benefits, which made up their total compensation. The additional perks brought Carter’s total 2016 total compensation to $894,369, a hike of about $377,000 from his 2009 compensation.
The total compensation of seven other top executives in 2016 ranged from $282,811 to $552,133, with nearly all of them receiving increases from the previous year, records show.
And Carter also received a golden parachute with his retirement last year: In addition to receiving $344,572 for life from the state retirement system, he will be paid up to $455,192 annually for 20 years through a separate executive retirement plan with the company, plus had had $858,577 in a 401(k)-type retirement plan through Santee Cooper, according to media reports.
The Santee Cooper board on Friday voted to close the two company-backed, executive retirement programs to new participants, a company spokeswoman said.
The Nerve in 2011 reported that Santee Cooper top executives, including Carter, received salary and benefit hikes during the Great Recession years and aftermath.
In more recent years, the utility’s top executives were getting raises and bonuses even as a now-public internal report authorized by Santee Cooper and its partner in the V.C. Summer project, South Carolina Electric & Gas, detailed serious problems with the project, which was abandoned last July 31.
Carter raised concerns in a 2013 letter to then-SCANA chief executive Kevin Marsh about construction of the two nuclear reactors in Fairfield County, according to information revealed during a state House special committee hearing last October.
No bonuses were paid in 2017 to Santee Cooper’s top executives, according to the utility’s records.
In recent emails to The Nerve, Santee Cooper spokeswoman Mollie Gore said “performance-based pay” given to top executives was “tied to specific corporate and individual goals on reducing costs and improving service and performance,” adding that most of the benefits related to “cost of power, customer satisfaction and safety results.”
Asked if no bonuses were given last year because the nuclear project was scrapped, Gore replied, “Performance results are audited prior to any benefits awarded, and that audit is ongoing.”
Whether any bonuses for top executives are planned for this year will “depend entirely on year-end results and an audit of those results,” Gore said.
Decades of debt
Santee’s Cooper debt for the V.C. Summer project was incurred by selling revenue bonds, Gore said. Although the utility is state-owned, those types of bonds can’t be repaid with tax dollars, which means ratepayers ultimately are responsible.
Gore said approximately $4.3 billion of the utility’s total $8.1 billion in outstanding debt is for the nuclear project. That will require the utility to pay $200 million to $300 million annually for principal and interest on the revenue bonds, she said.
Santee Cooper’s total debt from 2017 through 2056 is at least $15.6 billion, with scheduled annual payments reaching as high as $750.5 million in 2023, company records show.
Approximately $5 of a typical residential customer’s monthly bill of about $118 for 1,000 kilowatt hours of electricity is for the nuclear project, according to Gore. She said the utility “withdrew rate adjustments” planned for this year and next, given the abandonment of the nuclear project and a settlement with Toshiba Corp., the parent company of main project contractor Westinghouse, which filed for bankruptcy last year.
Gore added, though, “We anticipate rate adjustments in the future; however, the amount and timing of those have not been determined and will be impacted by plans to deploy the Toshiba settlement proceeds.”
Toshiba agreed to pay Santee Cooper $976 million out of a total $2.17 billion settlement with the utility and SCE&G, though Santee Cooper later sold its portion for $831.2 million, according to media reports.
Gov. Henry McMaster has publicly said he would like to find a buyer for Santee Cooper, though Gore in a Feb. 12 email to The Nerve noted, “We have not been approached with any buyout or merger offers.”
Santee Cooper supplies electricity to about 2 million people in South Carolina, providing power to the state’s 20 electric cooperatives in addition to directly serving more than 176,000 customers in Berkeley, Horry and Georgetown counties, according to its website.
The company has 1,745 employees, 1,738 and 1,710 of whom, respectively, participate in the state retirement and state health systems, Gore said.
The utility is governed by a 12-member board of directors appointed by the governor and confirmed by the state Senate, after they are screened and qualified by the six-legislator, 10-member State Regulation of Public Utilities Review Committee (PURC), which has considerable control over the regulation of utilities in South Carolina.
Six-figure salary club
The Santee Cooper board determines “salary and performance benefits for the CEO and performance guidelines for the other members of executive leadership,” while the CEO sets the salaries for “other members of executive leadership, and using Board-approved guidelines, assesses performance for the other executives,” Gore told The Nerve.
Following is a list of last year’s top salary earners, according to company records:
- Lonnie Carter: $540,929;
- Marc Tye, executive vice president/chief operating officer: $395,000;
- James Brogdon, interim president/CEO (assumed position in mid-October): $373,757;
- Jeff Armfield, senior vice president/chief financial officer: $370,552;
- Pamela Williams, senior vice president/corporate services: $307,424;
- Michael Baxley, senior vice president/general counsel: $292,136;
- Arnold Singleton, senior vice president/power delivery: $234,379;
- Michael Crosby, senior vice president/nuclear energy: $242,638; and
- Dominick Maddalone, senior vice president/chief information officer: $239,200.
Of Santee Cooper’s 1,745 employees, 284, or 16.2 percent, receive an annual salary of at least $100,000, Gore said. In comparison, The Nerve in 2011 reported that 149 employees, or about 8.2 percent of the regular workforce at the time, were making $100,000 or more.
Brundrett is the news editor of The Nerve. Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.
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