ATLANTA -- In an apparent first for a public power agency in the Southeast, the South Carolina Public Service Authority is planning to build a bond-financed $44 million facility to provide wholesale water to local governments.
"This is a project we are well suited to build and finance and that would serve a clear need," Graham Edwards, a senior vice president for the authority, said Wednesday. He said the authority, commonly called Santee Cooper because of its origins in a navigation project to connect South Carolina's Santee and Cooper Rivers, plans to place the unit on the southern shore of Lake Moultrie, located about 40 miles north of Charleston.
Mr. Edwards said the authority would sell tax-exempt revenue bonds to finance the program, with debt service covered by long-term contracts with participating municipalities. He said debt would not likely be sold before late 1992, and could be issued as part of the authority's minibond program, where the issuer markets bonds in $500 denominations directly to investors.
There are many advantages, Mr. Edwards said, to Santee Cooper's developing a 20-million-gallon-per-day water treatment plant, which he expects to be operational by late 1994.
The authority owns the property on Lake Moultrie, and it could build a pipeline delivery system on existing rights-of-way, he said. In addition, the regulatory process will be relatively simple because Santee Cooper is not subject to any third-party oversight in setting rates.
A treatment plant on Lake Moultrie, furthermore, would help growing local governments north of Charleston that have had a long-standing interest in a water source that does not rely on underground wells, Mr. Edwards said. A number of cities and counties have toyed with the idea of setting up their own water cooperative and were very responsive when the authority first began to consider building the plant last year, he added.
The water treatment plant also could chart a new course for the authority -- which until now has focused on developing a substantial network of electric power and distribution facilities. Santee Cooper currently owns 18 electric power plans outright and part of the Summer nuclear power facility, enabling it to serve 35 of the 46 counties in the state and about 400,000 customers.
So far, four local governmentals located between Charleston and Lake Moultrie tentatively agreed to sign long-term contracts to buy water from the authority, Mr. Edwards said.
Of the four, the city of Summerville probably would be the largest, with daily water needs of about 10 million gallons a day; followed by Berkeley County, which would take 5 million gallons a day; Goose Creek, 3.5 million gallons; and Moncks Corner, 2.1 million gallons per day.
He said more capacity could easily be added if other localities want to receive water.
Depending on the plan approved, building the plant and a 21-mile pipeline system actually could cost less tan $44 million, said Michael A. Yaeger, the authority's director of special projects. "We have been very conservative in our estimates, and some recent advances in technology could well bring the cost under $40 million," he said.
Mr. Yaeger said four engineering firms have been short-listed and one of them will be selected by early August to develop the project. He said the authority hopes to sign contract with the participants in August, begin construction in 1992, and start delivering water in September 1994.
At Standard & Poor's Corp., Malachy Fallon, a vice president, said the project could be good both for the authority -- which has sought to promote economic development in South Carolina, as well as to provide power -- and local governments in the state.
"Santee Cooper has the operation ability as well as the site and water source" to build a regional water plant, Mr. Fallon said. "As long as this is done in an economical way, it makes sense."
The authority last sold bonds in March in a $300 million offering of fourth-lien revenue bonds through an underwriting syndicate headed by Goldman, Sachs & Co. The proceeds are being used to launch Santee Cooper's 10-year, $1.2 billion capital improvement program, including construction of a new 520-megawatt coal-fired generating plant in Cross, S.C. The bonds were rated A1 by Moody's Investors Service and A-plus by Standard & Poor's Corp., the same as the authority's remaining outstanding long-term debt of about $2 billion.
Over the next five years, the authority plans to sell over $700 million of additional bonds to fund Cross I and about $400 million of other debt by the end of the decade.
