Why Santee Cooper is on the chopping block
Santee Cooper came under fire Tuesday for its plan to pay its top executives nearly $511,000 in bonuses over the next nine months.
The bonuses to seven executives, approved by Santee Cooper CEO Jim Brogdon, are meant to keep top talent at the state-owned utility during a period of tremendous uncertainty. The General Assembly is in the midst of a heated debate over whether to sell Santee Cooper after it racked up $4 billion in debt on the failed V.C. Summer nuclear power plant construction project.
But senators questioning Brogdon Tuesday said a desire to retain top leaders doesn’t excuse paying bonuses to executives at a state agency that is preparing to raise power bills to pay for the project, a decade-long venture that collapsed in July 2017 after years of cost overruns and construction delays.
“For many of us, Santee Cooper paying bonuses in this environment seems incredibly tone-deaf,” said Senate Majority Leader Shane Massey, R-Edgefield. “I don’t think you ought to do it anymore. It looks really bad. It is bad considering everything that’s going on with Santee Cooper and utilities in general in South Carolina. This comes across really poorly.”
The planned bonuses have not been reported previously. Senate Minority Leader Nikki Setzler, D-Lexington, first brought them up at a Senate committee hearing Tuesday.
After the hearing, Brogdon defended the bonuses for key executives.
“They were important not only in navigating us through these times but also, since they have such great experience, being able to find ways to reduce costs and be more efficient,” Brogdon said. “These folks are very important to the operation of Santee Cooper.”
One bonus has already been paid: $27,680 to Santee Cooper Chief Financial Officer Jeff Armfield on Dec. 31, 2018.
Armfield is set to earn another bonus — worth $55,360 — this Friday. He would have gotten another $55,360 in June, but he plans to retire before then.
Six other executives are set to earn bonuses if they stick around through the end of June and December.
Combined, those two bonuses are worth:
▪ $147,500 for Chief Operating Officer Mark Tye
▪ $76,500 for Pamela Williams, Santee Cooper’s senior vice president for corporate services
▪ $72,700 for General Counsel Mike Baxley
▪ $60,400 for Michael Crosby, Santee Cooper’s senior vice president for nuclear energy
▪ $59,600 for Chief Information Officer Dom Maddalone, and
▪ $38,900 for Arnold Singleton, the agency’s senior vice president for power delivery.
Brogdon, who became Santee Cooper’s interim CEO in October 2017 after longtime CEO Lonnie Carter retired, is not getting a retention bonus.
The agency’s board was told of the bonuses at a meeting last fall, but no vote was required to approve them, Santee Cooper said.
Santee Cooper’s spending is under intense scrutiny as S.C. politicians wrestle with how to protect the two million South Carolinians who use the utility’s power from rate hikes due to the V.C. Summer nuclear project’s failure.
Santee Cooper pulled the plug on that project on July 31, 2017, but only after spending $4 billion on two useless nuclear reactors.
As Santee Cooper pays off that debt, its electric rates are expected to rise a total of about 12 percent.
The utility’s direct serve customers in Horry, Georgetown and Berkeley counties will have to pay about $6,200 per household over the next four decades. Customers of the 20 electric co-ops that buy and distribute two-thirds of Santee Cooper’s power would have to pay about $4,200 per household.
Santee Cooper has caught flak for paying bonuses before.
Last May, The State reported Santee Cooper forked out $9 million to help its majority partner on the V.C. Summer project, SCANA, pay bonuses to reward its executives for their work on the doomed project.
Brogdon approved $594,000 in bonuses last fall. But since Armfield is leaving before his last bonus is to be paid, the utility expects to pay out $538,640 in bonuses by the end of 2019.
The Senate committee on Tuesday took no action to stop the bonuses from being paid.