Office of Regulatory Staff Continuing Request for ...

Office of Regulatory Staff Continuing Request for Information In Response to the Letter Dated October 29, 2020 by the Santee Cooper Oversight Committee Request: CRI.2 (SUPPLEMENTAL 2021-02-16) CRI.2 Please provide detailed context, plans and justification for the statement “going to have to

finance some new construction, new assets at some point in time.” Response should include, but is not limited to:

a. Types of new construction and/or new assets b. Business reason and purpose for new construction and/or new assets c. Detail of any capital projects for which Santee Cooper may use the $100 million in new

money d. Purchase and in-service dates of capital projects, new construction and/or new assets e. Identification and provision of the name, title and contact information (phone/e-mail) for

individual responsible for the information contained in the response

Based on Santee Cooper’s most recent capital budget, specific projects have been analyzed to determine tax-exempt eligibility and we have identified projects that we anticipate to be funded with the 2020A new money proceeds.

Based on tax rules, Santee Cooper can reimburse for expenditures paid 60 days prior to the 2020A bond issuance. Projects and tax analysis have been completed for this time frame as well as for expenditures through 2020 year-end. As a result, on January 12, 2021 Santee Cooper reimbursed the Capital Improvement Fund from 2020A proceeds for approximately $15.8 million of tax-exempt expenditures made between September 6-December 31, 2020. Below you will find details of the reimbursement by project:

Santee Cooper plans to use the remaining 2020A proceeds towards tax-exempt qualified projects in 2021. A tax analysis of potential projects based on budgeted cash flows was completed and based on these cash flows, we plan to use the remaining proceeds on capital projects including improvements to existing power supply facilities, improvements to the distribution system, as well as other general improvements of our system. Our plan is to initially pay expenditures from the CIF and then reimburse from debt proceeds. Expenditures and reimbursements are expected to be completed between January and October 2021.

Dist r ibution Syst em $ 8,566,677.94

VCSummer l 3,401,750.28

Winyah Generating Station 649,258.82

Ra iney Generating Station 3,216,315.98

$ 15,834,003 .02

Office of Regulatory Staff Continuing Request for Information In Response to the Letter Dated October 29, 2020 by the Santee Cooper Oversight Committee Request: CRI.2 (SUPPLEMENTAL 2021-02-16)

INDIVIDUAL RESPONSIBLE FOR 1HE INFORMATION CONTAINED IN THE RESPONSE:

Name Suzanne Ritter Title Treasurer Phone 843-761-8000 ext. 4071 Email shritter@santeecoop er. com

ATTESTATION:

I, Kenneth W. Lott, attest that the answers provided above, coupled with the information previously provided in response to this Request, are full and accurate as of 2/10/2021.

Signature of Officer:---~------+- ~ - _,_~----• _________ _

Office of Regulatory Staff Continuing Request for Information In Response to the Letter Dated October 29, 2020 by the Santee Cooper Oversight Committee Request: CRI.5 (SUPPLEMENTAL 2021-02-16) CRI.5 Please provide a detailed description of any and all discussions (whether occurring before or

after any bond related financial transactions) with internal or external entities related to the financial transactions, which were announced by Santee Cooper on October 28, 2020. Response should include, but is not limited to:

a. Date of discussions b. Names of individuals that attended the discussions c. Timeline for planning the financial transaction (i.e. the start date and end date) d. Dates on which approval was sought from the Santee Cooper Board of Directors e. Date on which approval was gained from the Santee Cooper Board of Directors f. Purpose of discussion g. Identification and provision of the name, title and contact information (phone/e-mail)

for individual responsible for the information contained in the response. Santee Cooper has continued to have various discussions concerning the 2020AB transaction. The primary topics of these discussions were the use of the bond proceeds, questions on compliance with Cook Settlement and the development of communications materials that include 2020AB transaction data. We do not have dates for all discussions because many were impromptu; however, below you will find a list of individuals who participated in at least some of these discussions: Santee Cooper Internal Personnel

• Mark Bonsall, President & CEO • Ken Lott, Chief Financial & Administration Officer • Suzanne Ritter, Treasurer • Pamela Williams, Chief Public Affairs Officer & General Counsel • Shawan Gillians, Director of Legal Services & Corporate Secretary • Faith Williams, Manager of Debt Management & Investor Relations • Nan Cline, Senior Financial Analyst • Rahul Dembla, Senior Director of Finance & Resource Planning • Greg McCormack, Senior Manager of Financial Forecast • Devin Ritter, Financial Analyst III • Rebecca Roser, Associate General Counsel • Mollie Gore, Director Corporate Communications • Geoff Penland, Director State & Federal Government Relations • Yvette Rowland, Senior State & Federal Government Liaison • Brittany Felkel, Administrator Investments

Santee Cooper Board members

• Dan Ray • David Singleton • Kristofer Clark • William Finn • Merrell Floyd • Calhoun Land


• Stephen Mudge • Peggy Pinnell • Barry Wynn • Charles Leaird

Other Santee Cooper Team Members

• Public Financial Management (Financial Advisor): Mike Mace, Eric Smith • Nixon Peabody (Disclosure, Bond & Tax Counsel): Liz Columbo, Virginia Wong, Barry

Rothchild, Mitch Rapaport • Nelson Mullins (Outside Legal Counsel & Advisors): Rush Smith, Carmen Thomas, Matt

Bogan, Earle Taylor, Jay Suhr • Centerview (Investment Banking Advisors): John Cogan, Peter Hearne and Zach Mohamed

On January 12th, Santee Cooper’s internal staff (Ken Lott, Suzanne Ritter, Dan Manes, Jennifer Wadford and Faith Williams) had a phone conversation with Central (John Brantley) and the 2020AB transaction was discussed in this meeting. Following this meeting, follow-up materials were provided to John Brantley on January 20th and February 4th via email. Santee Cooper had the following meetings with the legislature where the 2020AB transaction was discussed:

• On January 26th, Santee Cooper staff (Pamela Williams, Ken Lott and Geoff Penland) hosted a webex meeting with Kate Wink, Senior Budget Analyst with the Senate Finance Committee where the 2020AB transaction was discussed.

• On February 2nd, Acting Chairman Dan Ray, Mark Bonsall, Charlie Duckworth and Pamela Williams) gave a Progress Update to the Senate Judiciary Committee. During this meeting the 2020AB transaction was discussed. Please reference presentation named “CRI.5_shritter_Santee Cooper Update to Senate Judiciary Subcommittee 2.2.21.pdf”.

• On February 8th, Dan Ray, Mark Bonsall, Charlie Duckworth and Pamela Williams provided an Act 135 Progress Update which discussed the 2020AB transaction. Please reference presentation named “CRI.5_shritter_Santee Cooper Update to Senate Finance Subcommittee 2.8.21.pdf”.

Santee Cooper Progress UpdateSenate Judiciary Subcommittee

February 2, 2021

~~antee cooper'

®Business Model

A public enterprise like Santee Cooper is a businessthat should provide its owners, the citizens, with returns –

• Low Cost and Reliable Electricity

• Water Management and Services

• Economic Development

• Environmental Stewardship

• Broadband

date-unit no-pres no-2

~~antee cooper·

®

Customer Focus – Provide safe, reliable and affordable power Cost Management – Deliver resource value by keeping prices low Ensure Reliability – Reliability is the number one product of any utility, not

electricity Environmental Stewardship – Responsibly manage the environmental

impact of Santee Cooper’s operations Take a Long-Term View – Develop a long-term resource strategy to ensure

flexibility across a wide range of potential outcomes Reduce Financial and Planning Risk – Add generation in smaller

increments that more closely match resource needs Embrace Innovation – The accelerating development of new technology is

transforming generation, transmission and distribution Transparency – Engage customers, stakeholders, Board members and

elected officials in a transparent resource planning process that is responsive to questions and input

3

Resource Planning Principles ~antee cooper

®Pricing Principles

Mission: Limit price increases to less than inflation and maintain prices that are competitive in the region

Equity: Allocate costs to specific customer classes in a reasonable, equitable and defensible manner (i.e. customer class returns should be nearly equal)

Efficiency: Design prices so that conservation savings are shared with the customers

Financial Adequacy: Provide sufficient revenue to preserve the financial integrity of Santee Cooper (long-term ‘A category’ or above) and comply with commitments to bondholders

Notice: Ensure customer notice and engagement in rate proceedings Protection: Allow reasonable relief mechanisms for financially

distressed customers Transparency: Require openness in annual review of compliance with

Pricing Principles

4

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.. • I .

®

• Reduced staff through attrition and retirement, no layoffs• Shrunk executive ranks approximately 20%• Increased senior management diversity• Formed Inclusion, Diversity and Equity Awareness (IDEA)

Council

Done: Reorganized staff

Major Points of Progress

• Settled Cook et al• Settled WEC• Settled Turka• Created settlement path for Century/Goose Creek

Done: Removed threat of pending

litigation• Hedged gas• Renegotiated coal• Bid and contracted solar with Central• Launched Winyah closing plan, idled Unit 4• Produced Act 62 IRP with Central

Done: Redesigned and launched

resource direction

• Paid off >$600 million net debt• Refinanced $750 million• Levelized debt service • Contracted VCS 2/3 equipment disposition

Done: Redesigned and launched

financial direction

date-unit no-pres no-5Achieved “Stable A” Credit Ratings

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i >

®

LITIGATION


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®Nuclear Litigation

Claims Class action filed on behalf of direct Santee Cooper customers and electric

cooperative customers Sought return of funds paid by ratepayers for construction of V.C. Summer Units 2&3

Settlement: Return of funds to ratepayers $520 million in cash returned to ratepayers by Santee Cooper and Dominion Energy Santee Cooper contributed $200 million in cash

$65 million in 2020, $65 million in 2021, and $70 million in 2022 Recorded the entire $200 million expense in 2019 - took it to the bottom line

Class members received first installment at the end of 2020 and will receive second installment in 2022

Settlement: Rate Lock Santee Cooper rates locked to Reform Plan projections through 2024 Santee Cooper will not defer costs or expenses incurred during or attributed to Rate

Lock except as noted in agreement Settlement funds will not be used as basis for future rate increases

72A

Santee Cooper has resolved all ratepayer-related nuclear litigation

Cook v. Santee Cooper et al. and Glibowski v. Santee Cooper et al

~~antee cooper


Cross-Claims Cross-claims were asserted against Santee Cooper by Central

Cross-claims were asserted between Santee Cooper and SCE&G (n/k/a Dominion Energy)

Settlement: Resolution with Central Electric Power Cooperative Santee Cooper’s resolution of claims by plaintiffs in Cook also resolved Central

Electric’s claims against Santee Cooper

Settlement: Resolution with Dominion Energy Santee Cooper and Dominion Energy agreed to mutual releases with Dominion Energy

agreeing to indemnify Santee Cooper for any judgment or settlement of other matters related to V.C. Summer Units 2&3, including:

FILOT case (Fairfield County) Dept. of Revenue matter (Sales tax) Cameco (Nuclear fuel arbitration) WARN Act litigation (Indemnity case filed by Fluor)

8

Santee Cooper has resolved all major associated non-ratepayer nuclear litigation

Cross-Claims in Cook

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9

Santee Cooper has resolved its dispute concerning ownership of VCS equipment

Westinghouse v. Santee Cooper

Claims Dispute between Westinghouse and Santee Cooper regarding ownership of V.C.

Summer Units 2&3 equipment

Settlement Westinghouse will market nuclear-pedigree equipment and share net sales

proceeds with Santee Cooper Santee Cooper owns 100% of all other equipment and has engaged a firm to

pursue sales Conservative projection in financial forecast of $100 million in proceeds from

equipment sales Four diesel generators will be used for system reliability to support closure of

Winyah Units 3&4

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®

Nuclear Litigation

10

Santee Cooper has resolved its mini-bond holder nuclear litigation

Turka v. Santee Cooper

Claims Class action filed on behalf of purchasers of Santee Cooper mini-bonds Claims relate to disclosures made in conjunction with issuance of mini-bonds

Settlement Santee Cooper agreed to pay $2 million plus up to $35,000 for cost of settlement

administrator

Status of Settlement Court approval pending Motion for Preliminary Approval filed with the court on January 25 Following preliminary approval, the class will receive notice Following notice to class, a Motion for Final Approval will be filed All mini-bonds were retired in 2019 – principal and interest fully paid

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®

RESOURCE ECONOMICS


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®Fuels Risk – Natural Gas

12

12

Act 135 precludes hedging post 2024 – application to SCOC pending

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Natural Gas Commodity Contract Position Summary of Volumes @1/ 19/ 2021 • Hedged

100% ,-r- - ,-.-----,-----.- J~--,---,r-

75%

50"/o

25%

l oot6 l ()()l(i 989' 99%

0% - --------....------..------.-Balance of 2022 2023 2024

2021

• Open

2025 2026 2027 2028 2029 2030 2031

®D

elivered Coal C

osts H

istorical vs. Projected

date-unit no-presno-13

Jan-17

Mar -17

May-17

Jul-17

Sep-17

Nov-17

Jan-18

Mar-18

May-18

Jul-18

Sep-18

Nov-18

Jan-19

Mar-19

May-19

Jul-19

Sep-19

Nov-19

I Jan-20

Mar-20 l> n May-20 ..... C OJ Jul-20

Sep-20

Nov-20

Jan-21

Mar-21

" May-21

..... .2. Jul-21 (l)

Sep-21 n ..... (l) Nov-21 a.

Jan-22

Mar-22

May-22

Jul-22

Sep-22

Nov-22 A Jan-23

Mar-23 ~~ May-23 ~ Jul-23 ::J

Sep-23 ,-+

Nov-23 (D (D

Jan-24

Mar-24 0 May-24 0

Jul-24 0 Sep-24 -0 Nov-24

(D

' (ii

®Executed Solar Contracts

14

Central and Santee Cooper have jointly contracted for 425 MW of solar at pricing consistent with our planning assumptions

100 100

75 75 75 Up to 75

0

20

40

60

80

100

Project A B C D E F

Negotiations Ongoing:

MWs

• Located within South Carolina and expected to be operational by 2023

• No additional debt

• Protects customers from fuel price volatility

• Lowers Santee Cooper’s carbon footprint

• Hedges against carbon legislation

~~antee cooper·

®Winyah Generating Station

date-unit no-pres 15

Launched staff transition plan

Idled Winyah 4 Close Winyah 3&4

Close Winyah 1&2

September 2020

December 2020

December 2023

December 2027

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®2020 Integrated Resource Plan

• Santee Cooper filed its 2020 IRP with the State Energy Office on December 23, in compliance with Act 62– Act 62 requires an IRP filing every three years and

specifies IRP process requirements– IRP available on Santee Cooper and State Energy

Office websites• The enactment of Act 135 enabled us to collaborate with

Central in the development of our underlying resource plan

16

~~antee cooper·

®Key Elements of 2020 IRP

• Restores balance of supply and demand • Improves fuel diversity

– Reduces reliance on coal resources– Adds renewable and natural gas resources– Phased implementation of batteries and demand response

• Preserves optionality• Lightens capital expenditures• Reduces emissions

Much more efficient –economically and environmentally

17

-----, i ___,.

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®A Balanced Future Power Supply

18

Restores balance of supply and demand by adding resources in increments to match demand

Winyah 4 Idled

All Winyah units retired

NGCC/CT (550 MW) addition

Purchases sized to meet demand (2031-2040)

• Phased solar implementation: 500 MW by 2023; 1,000 MW by 2026 and 1,500 MW by 2032• 50 MW battery modules added in years 2026-2036 for 200 MW aggregate capability

Winyah 3&4

Retired

~~antee cooper·

5,900

5,700

§" 2 5,500 -> -·u

5,300 11:1 C. 11:1 u ~

5,100 ..:ic: 11:1 QJ Q. ....

4,900 QJ -C

~. 4,700

4,500 0 .--I N M <:j" 1..1"1 I.D r--. 00 (J) 0 .--I N M <:j" 1..1"1 I.D r--. 00 (J) 0 N N N N N N N N N N M M M M M M M M M M <:j" 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N

- Capacity Requirements - Total Resources

Delivering more solar, less coal, 55% fewer emissions

IRP Impacts: 2030s mix

19

Significantly improves fuel diversity

9%

OLD ROADMAP

• New Purchased Power Agreement

• New • Economy Gas Purchases

Sustainable Resources

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2%

19%

2020 RESOURCE

IP'LAN

10% 19%

Nuclear Existing Gas

Coal

®

CAPITAL ECONOMICS


~~antee cooper·

®Debt Transactions Since 2017:

Debt Defeasances = $938 Million

Long-term Debt Principal Payments = $325 million

Net Reduction in Short-term Debt = $185 million

New Long-term Debt Issuance = $85 million

In addition, debt refinancings have reduced future interest payments by approximately $330 million

date-unit 21no-21

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®Debt is Declining

date-unit 22 no-22

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Total Debt Outstanding 2010-2020

$9.0

$8.0 $6.8 $6.9

$7.7 $8.2

$7.9 $7.3

$6.9 $6.8 $7.0

$5.9 $5.5 Vl $6.0 $5.3 C

0

·- $5.0

r co

$4.0

$3.0

$2.0 Debt level before Santee Cooper

Debt peaks

$1.0 began nuclear

$0.0 borrowing

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

®Debt Service is De-risked and Levelized

23

Revenue Obligation Debt Service1

_____________________________________________1. Does not include benefit of BABs subsidy, estimated at approximately $7.6m/year

$0

$100

$200

$300

$400

$500

$600

2021 2026 2031 2036 2041 2046 2051 2056

mill

ions

Defeasance Interest

Principal Total Debt Service

date-unit 23

I I I I

I -I I I I

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-

®

Callable Debt

24

Debt Outstanding as of 12/31/20($ millions)Revenue Obligation Bonds:

Fixed $ 6,346,262 Variable 162,885

Total Revenue Obligation Bonds $ 6,509,147

Bank Facilities:Commercial Paper $ 171,251 Revolving Credit Agreements 136,100 Total Bank Facilities $ 307,351

Total Debt Outstanding $ 6,816,498

Approximately 33% of Santee Cooper’s bonds, or $2.2 billion, are callable through 2024

Callable bonds allow Santee Cooper to take advantage of refunding opportunities over the next few years

Federal law precludes us from advanced refundings of tax-exempt debt

Bond Counsel advises us that interest rate swaps are not consistent with the provisions of Act 135

~~antee cooper

®Act 135 Provisions on Debt

2525

Act 135(11)(E): Nothing in this section prohibits Santee Cooper from:

(8) defeasing debt, issuing or refunding debt under existing bond resolutions and agreements, and entering into financing arrangements consistent with existing bank facilities, all as necessary to manage day to day operations and financing needs, including converting variable rate debt to fixed rate debt. Refunding of existing debt is permitted if it achieves present value savings or mitigates risk and does not extend the average life of the debt;

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®Current Senior Bond Resolution

26

Master Revenue Obligation adopted April 26, 1999• Creates Santee Cooper’s Revenue Obligations that may be

issued for any corporate purpose• Establishes general terms, covenants with bondholders,

appointment of a trustee and other procedures and requirements

• Allows for additional bonds (including 2020A and B) to be issued pursuant to supplemental resolutions, which:– Contain provisions specific to the bonds being issued - interest

rates and maturities, redemption features, continuing disclosure requirements, establishment of an escrow, etc.

– Do not create new bond covenants

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®

WORKFORCE ECONOMICS


~~antee cooper·

®Internal Staffing

1,863 budgeted headcount

2017 1,655 budgeted headcount

21% nonwhite

2021


Associated savings 2017-2020: over $90 million

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®Management Staffing and Diversity

41 senior management positions

2% nonwhite


21% nonwhite

2021


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®SCHAC Ranking

We just learned yesterday that Santee Cooper tied for #1 among state agencies for meeting 2020

workforce diversity goals.


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®

WHAT DOES ALL OF THIS MEAN? STABILITY.


~~antee cooper·

®Stable Prices


1. Industrial rates based on aggregate sales, including non-firm.

Over a decade of stable or declining prices

11.98 11.84

9.50 9.40

5.28 4.95

-

2

4

6

8

10

12

14

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

cent

s/kW

h

Residential Commercial Industrial (1)

Rate Lock

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• •

®Stable Credit Ratings

Agency Debt Rating Outlook ChangeMoody’s A2 Stable Improved outlook

Fitch A- Stable Improved outlookS&P A Negative Unchanged

33

Fitch, October 2020:

“The revision in Rating Outlook to Stable from Negative” reflects:

• Cook settlement

• Progress in compliance with Act 135 provisions

Fitch also said its ‘A–’ rating primarily reflects Santee Cooper’s debt service coverage and noted Santee Cooper’s debt burden has steadily declined since 2016.

Stable “A” Credit Ratings

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®

CURRENT EVENTS


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®

35

Century Aluminum

• Draft service agreement through the end of 2023– Application to SCOC pending– Expands service to 296 MW from Santee Cooper

resources– Preserves ~300 existing jobs at the Mt. Holly facility– Allows for creation of 70 potential new jobs– Regains access to 150 MW of import capability into

our transmission system– Protects the best interests of Santee Cooper and our

customers

~~antee cooper·

®2020 Operating Results

• Employee Safety– 2018 and 2019: Placed 1st among large utilities in American Public Power

Association, for three out of four years– 2020: Tied for best year ever (2018)

• Customer Reliability– Transmission Reliability (ASAI): 99.9981% versus a goal of 99.9970%– Distribution Reliability (SAIDI): 23.9 minutes without power versus a goal of 30

minutes or less– In 2019, Santee Cooper ranked #4 for distribution reliability out of 550 IOU and

co-op utilities in the U.S.

• Customer Satisfaction– Industrial = 100%– Commercial = 96.1%– Residential = 95.6%– Wholesale – Municipal = 87.5%– Wholesale – Cooperative = 15.4%

date-unit 36

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®Preliminary 2020 Financial Results

• Strong Financial Metrics– Days Liquidity on Hand = 354 Days– Days Cash on Hand = 159 Days– Debt-to-Equity Ratio = 76/24– Debt Service Coverage = 1.31x

• Positive Bottom-Line Results– Funds Available After Operations and Debt Service =

$140 million– Reinvested Earnings = $53 million before Payment to

the State


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®

AT THIS POINT…


~~antee cooper·

®A Major Strategic Emphasis

• Effect “soft landing” post rate lock, which requires:– Gas hedging post 2024– Using interest rate swaps to achieve refinancing savings– Planning for next resource

• Act 135 concerns – limited ability to:– Hedge gas post 2024– Use interest rate swaps– Plan for next resource– We can’t proceed without relief from SCOC or otherwise


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®

REFORM


~~antee cooper·

®S. 464

• We are proud of the progress we have made to date, and there is more to do.

• We are here to assist in any way as you work on the reforms to come.


~~antee cooper·

Santee Cooper Act 135 Progress Update

Senate Finance SubcommitteeFebruary 8, 2021

~~antee cooper·

®Business Model

A public enterprise like Santee Cooper is a businessthat should provide its owners, the citizens, with returns –

• Low Cost and Reliable Electricity




• Broadband


~~antee cooper·

®

Job #1: Settle Nuclear Litigation

Cook v. Santee Cooper et al and Glibowski v. Santee Cooper et al Class action filed on behalf of direct Santee Cooper customers and electric cooperative customers Settlement: $520 million in cash returned to ratepayers by Santee Cooper ($200 million) and

Dominion Energy ($320 million) and rate lock through 2024 Santee Cooper’s installment payments: $65 million in 2020, $65 million in 2021, and $70 million in

2022 (recorded the entire $200 million expense in 2019) Class members received first installment at the end of 2020 and will receive second installment in

2022 Also settled cross-claims with Central, Dominion

Westinghouse v. Santee Cooper Dispute regarding ownership of V.C. Summer Units 2&3 equipment Settled: Westinghouse will market nuclear-pedigree equipment and share proceeds with Santee

Cooper; Santee Cooper owns 100% of other equipment and has engaged a firm to pursue sales Turka

Class action filed on behalf of purchasers of Santee Cooper mini-bonds Santee Cooper agreed to pay $2 million plus up to $35,000 for cost of settlement administrator Court approval pending

Santee Cooper has resolved all ratepayer-related nuclear litigation

3

~~antee cooper

®Rate Lock

• Implemented in August and communicated details to customers

• Board approved 2021 budget (and 2022-2023 for planning purposes) supporting rate lock

• Providing supporting documentation monthly to the ORS


~~antee cooper·

®Act 135, Section 11(D-E) Allows:

• Joint resource planning with Central• Taking steps to decommission Winyah• Deploying up to 500 MW solar• Entering into efficient joint operations with neighboring utilities• Renegotiating coal and related contracts• Hedging natural gas• Conducting studies related to natural gas transportation and power

transmission• Entering into purchased power agreements• Defeasing, issuing or refunding debt under existing bond resolutions

and agreements and entering into financing arrangements consistent with current bank credit facilities…

• Resolving lawsuits• Addressing impacts of COVID-19• Freezing rates consistent with the Cook settlement


~~antee cooper·

®Planning with Central

• Santee Cooper filed a 2020 Integrated Resource Plan with the State Energy Office on December 23, in compliance with Act 62 and after collaboration with Central on the underlying resource plan

• Key Elements– Restores balance of supply and demand – Improves fuel diversity

• Reduces reliance on coal resources• Adds renewable and natural gas resources• Phased implementation of batteries and demand response

– Preserves optionality but contemplates a new resource in late 2020s • Began work to confirm schedule assumptions for a potential natural

gas combined cycle unit, but suspended work after ORS asked the Oversight Committee to clarify abilities in this area

– Lightens capital expenditures– Reduces emissions– Lowers costs

6

~~antee cooper·

®A Balanced Future Power Supply

7

Restores balance of supply and demand by adding resources in increments to match demand

Winyah 4 Idled

All Winyah units retired

NGCC/CT (550 MW) addition

Purchases sized to meet demand (2031-2040)

• Phased solar implementation: 500 MW by 2023; 1,000 MW by 2026 and 1,500 MW by 2032• 50 MW battery modules added in years 2026-2036 for 200 MW aggregate capability

Winyah 3&4

Retired

~~antee cooper·

5,900

5,700

§" 2 5,500 -> -·u

5,300 l1l C. l1l u ~

5,100 .:ic: l1l QJ Q. ._

4,900 QJ -C

~. 4,700

4,500 0 .--I N m <::t 1..1"1 I.D r--. 00 (J) 0 .--I N m <::t 1..1"1 I.D r--. 00 (J) 0 N N N N N N N N N N m m m m m m m m m M <::t 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N

- Capacity Requirements - Total Resources

Delivering more solar, less coal, 55% fewer emissions

IRP Impacts: 2030s mix

8

Significantly improves fuel diversity

9%

OLD ROADMAP

• New Purchased Power Agreement

• New • Economy Gas Purchases

Sustainable Resources

~~antee cooper·

2%

19%

2020 RESOURCE

IP'LAN

10% 19%

Nuclear Existing Gas

Coal

®Winyah Generating Station

Launched staff transition plan Idled Winyah 4 Close

Winyah 3&4Close

Winyah 1&2

September 2020

December 2020

December 2023

December 2027

As Winyah Units 3-4 are retired, we are relocating diesel units from VC Summer to a site near Conway, to ensure system reliability.

9

~~antee cooper·

®Executed Solar ContractsCentral and Santee Cooper have jointly contracted for 425 MW of

solar at pricing consistent with our planning assumptions

100 100

75 75 75 Up to 75

0

20

40

60

80

100

Project A B C D E F

Negotiations Ongoing:

MWs

• Located within South Carolina and expected to be operational by 2023

• No additional debt

• Protects customers from fuel price volatility

• Lowers Santee Cooper’s carbon footprint

• Hedges against carbon legislation

10

~~antee cooper

®D

elivered Coal C

osts H

istorical vs. Projected a, ..., ..... 00 <D

..... ..... ..... g ~ 8 ~ 0 .....

V, 0 u, u, V,

~ j ~ * * * * * * * Jan-17

Mar-17

May-17

Jul-17

Sep-17

Nov-17

Jan-18

Mar-18

May-18

Jul-18

Sep-18

Nov-18

Jan-19

Mar-19

May-19

Jul-19

Sep-19

I Nov-19

Jan-20 l> n Mar-20 ...... C

May-20 CJ

Jul-20

Sep-20

Nov-20

Jan-21

" Mar-21

--, May-21 .Q.

(l) Jul-21 n -(l) Sep-ll c... Nov-21

Jan-22

Mar-22

May-22

Jul-22

Sep-22

~ Nov-22

Jan-23

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,-+-Sep-2.3 (D Nov-23 (D Jan-24 0

Mar-24 0 May-24 0

Jul-24 -0 Sep-24 (D Nov-24 ~

Cil

®Fuels Risk – Natural Gas

12Act 135 precludes hedging post 2024 – application to SCOC pending

12

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CD C: 0 .: "' tJ

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~~antee cooper

Natural Gas Commodity Contract Position Summary of Volumes @1/19/2021 • Hedged

100% rr---,---.------y-.- ,~---.-- --,,-

75%

500/o

25%

1~ 98% 0% -----......... ~--....--------..----'""T""

Balance of 2021

2022 2023 2024

• Open

2025 2026 2027 2028 2029 2030 2031

®

13

Purchased Power Agreements

• Tested the market for opportunities to identify potential purchase power prospects within the rate freeze period

• Received healthy responses from the market

• Terms were not attractive in light of our historic ability to secure low price purchase power in the day-ahead/hourly markets

• Continue to remain active in the day-ahead/hourly markets and monitor the market to identify potential longer-term opportunities

13

~~antee cooper·

Examples of MOUs withDominion and Southern

Right-of-Way management and inspection

Coordinated procurement

14

~~antee cooper'

®Debt Since 2017: Reduced the amount, cost and risk of debt

Debt Defeasances = $938 million

Long-term Debt Principal Payments = $325 million

Net Reduction in Short-term Debt = $185 million

New Long-term Debt Issuance = $100 million proceeds

In addition, debt refinancings have reduced future interest payments by approximately $330 million

Board approved setting aside $85 million for 2023 debt bullet maturity

Callable debt Approximately $2.2 billion is callable through 2024

Federal law precludes us from advanced refundings of tax-exempt debt

Bond Counsel advises us that interest rate swaps are not consistent with the provisions of Act 135

15

~~antee cooper·

®Act 135 Debt Provisions

Act 135(11)(E): Nothing in this section prohibits Santee Cooper from: (8) defeasing debt, issuing or refunding debt under existing bond resolutions

and agreements, and entering into financing arrangements consistent with existing bank facilities, all as necessary to manage day to day operations and financing needs, including converting variable rate debt to fixed rate debt. Refunding of existing debt is permitted if it achieves present value savings or mitigates risk and does not extend the average life of the debt

Master Revenue Obligation adopted April 26, 1999• Creates Santee Cooper’s Revenue Obligations that may be issued for any corporate

purpose• Establishes general terms, covenants with bondholders, appointment of a trustee and

other procedures and requirements• Allows for additional bonds (including 2020A and B) to be issued pursuant to

supplemental resolutions, which:– Contain provisions specific to the bonds being issued - interest rates and maturities,

redemption features, continuing disclosure requirements, establishment of an escrow, etc. – Do not create new bond covenants

16

~~antee cooper·

®

17

Market Conditions

The graph below is the Municipal Market Data Index AAA-rated 10 year maturity for tax-exempt bonds which shows both the very low level of interest rates as well as the market’s vulnerability to disruption

In early 2020, rates shot upward and issuance came to a near standstill in reaction to the COVID-19 pandemic

Later in 2020, rates fell to historic lows and Santee Cooper reacted quickly to take advantage of the low interest rate environment

Santee Cooper priced its 2020AB transaction on October 23 and closed on November 5, 2020

Santee Cooper’s 2020AB transaction took advantage of historically low interest rates

Z .75

2 .50

2 .~

2 .00

1.75

1 00

1.25

1.00

0 .75

0 .50 01.<l2/1Q 0311 lflQ 0~12011Q 07f.2Q/1Q 10J07f1Q 1211011Q 021241.20

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j-AAA GO 1 O yr 01/01/2019- 10/:?9/~020 Dally I

~~antee cooper·

---~ 07113120 OQ/21/20

00/08120 08117/Z0 10126/20

®

18

2020AB Transaction The 2020AB transaction totaled $638.2 million in bond sales with an all-in true interest cost (TIC)

of 2.87%

This transaction consisted of refunding existing debt and issuing new money:

• Refunding Existing Debt ($553.7 million par)- $569.5 million of existing debt was refunded at lower interest rates (all-in TIC of 2.72%)- Tax-exempt: $292.4 million Taxable: $277.1 million- Reduced cost: Approximately $330 million in gross savings and $134 million in NPV- Reduced par: Approximately $16 million- Reduced the average life: 8.5 years (21.4 years to 12.9 years)

• New Money Issuance ($84 million par)- Issued $84 million par and received $100 million in tax-exempt proceeds- The average life of the new debt is 22.7 years- Took advantage of low interest rates to finance a portion of our tax-exempt expenditures

related to our capital improvement program (all in TIC of 3.432%)

Santee Cooper added an Extraordinary Call provision to the tax-exempt bonds which significantly reduces the cost of paying off/defeasing the debt prior to the 10-year call date

Structure of entire transaction allowed us to flatten our debt service beyond the rate freeze which will help to stabilize future rates and benefit our customers

~~antee cooper·

®

19

Conclusion

The 2020AB transaction provided extraordinary benefits for our customers

We believe, and ORS concluded, that this is compliant with Act 135, Section 11, Subsection (E) (8)

We agree that the level of detail in the initial monthly communication for the 2020AB transaction was insufficient; supplemental disclosure has been provided.

~~antee cooper·

®Debt is Declining

20

~~antee cooper·


$9.0

$8.0 $6.8 $6.9

$7.7 $8.2

$7.9 $7.3

$6.9 $6.8 $7.0

$5.9 $5.5 Vl $6.0 $5.3 C

0

·- $5.0

r co

$4.0

$3.0

$2.0 Debt level before Santee Cooper

Debt peaks

$1.0 began nuclear

$0.0 borrowing

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

®Debt Service is De-risked and Levelized

21

Revenue Obligation Debt Service1

_____________________________________________1. Does not include benefit of BABs subsidy, estimated at approximately $7.6m/year

$0

$100

$200

$300

$400

$500

$600

2021 2026 2031 2036 2041 2046 2051 2056

mill

ions

Defeasance Interest

Principal Total Debt Service

21

I I I I

I -I I I I

~~antee cooper

-

®

22

Bank Facility Renewals Santee Cooper’s Bank Facility consists of Commercial Paper (CP) and Revolving Credit

Agreements (RCA), also referred to as Direct Purchase (DP) In 2020, three of our four agreements were set to expire Santee Cooper executed an amendment to the JP Morgan agreement in early August and

executed agreements with Barclays and Bank of America in September Santee Cooper also executed a new Issuing & Paying Agent Agreement with US Bank to

reflect changes to our bank facility program

Bank Facility Use Santee Cooper uses its bank facilities for a variety of corporate purposes including

financing a portion of our capital program on a temporary or longer-term basis, managing our coal stockpiles, financing Economic Development loans and other projects

CP is typically up to 120 days in duration and when it matures it is either replaced with new CP in the same amount, replaced with a lower amount or replaced with a higher amount based on Santee Cooper’s financing needs

Santee Cooper has issued and paid down debt under these agreements

Defeasance On December 17th, Santee Cooper closed on its 2020 Cash Defeasance of $60 million for

bonds maturing December 1, 2021

Other Debt Transactions ~~antee cooper·

®Internal Staffing

1,863 budgeted headcount

2017 1,655 budgeted headcount

21% nonwhite

2021


Associated savings 2017-2020: over $90 million

~~antee cooper.

®Management Staffing and Diversity


2% nonwhite


21% nonwhite

2021


Santee Cooper tied for #1 among state agencies for meeting 2020 workforce diversity goals.

~~antee cooper·

®

WHAT DOES ALL OF THIS MEAN?

25

~~antee cooper·

®Stable Prices




11.98 11.84

9.50 9.40

5.28 4.95

-

2

4

6

8

10

12

14

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

cent

s/kW

h


Rate Lock

~~antee cooper

• •

®Stable Credit Ratings

Agency Debt Rating Outlook ChangeMoody’s A2 Stable Improved outlook

Fitch A- Stable Improved outlookS&P A Negative Unchanged

27

Fitch, October 2020:

“The revision in Rating Outlook to Stable from Negative” reflects:

• Cook settlement

• Progress in compliance with Act 135 provisions

Fitch also said its ‘A–’ rating primarily reflects Santee Cooper’s debt service coverage and noted Santee Cooper’s debt burden has steadily declined since 2016.

Stable “A” Credit Ratings

~~antee cooper

®Major Strategic Emphasis

• Effect “soft landing” post rate lock, which requires:– Gas hedging post 2024– Using interest rate swaps to secure refinancing

savings– Planning for next resource


~~antee cooper·

®

OTHER RESULTS


~~antee cooper·

®Century Aluminum

• Draft service agreement through the end of 2023– Application to SCOC pending– Expands service to 296 MW from Santee Cooper

resources– Preserves ~300 existing jobs at the Mt. Holly facility– Allows for creation of 70 potential new jobs– Regains access to 150 MW of import capability into

our transmission system– Protects the best interests of Santee Cooper and our

customers

30

~~antee cooper·

®2020 Operating Results

• Employee Safety– 2018 and 2019: Placed 1st among large utilities in American Public Power

Association, for three out of four years– 2020: Tied for best year ever (2018)

• Customer Reliability– Transmission Reliability (ASAI): 99.9981% versus a goal of 99.9970%– Distribution Reliability (SAIDI): 23.9 minutes without power versus a goal of 30

minutes or less– In 2019, Santee Cooper ranked #4 for distribution reliability out of 550 IOU and

co-op utilities in the U.S.

• Customer Satisfaction– Industrial = 100%– Commercial = 96.1%– Residential = 95.6%– Wholesale – Municipal = 87.5%– Wholesale – Cooperative = 15.4%

31

~~antee cooper·

®Preliminary 2020 Financial Results

• Strong Financial Metrics– Days Liquidity on Hand = 354 Days– Days Cash on Hand = 159 Days– Debt-to-Equity Ratio = 76/24– Debt Service Coverage = 1.31x

• Positive Bottom-Line Results– Funds Available After Operations and Debt Service =

$140 million– Reinvested Earnings = $53 million before Payment to

the State


~~antee cooper·

®More Results• Camp Hall named 7th best

commerce park in country• Lake Marion water system

expansion• Econ Dev: w/co-ops, helped attract

$600M investment, 1,300 jobs• Installed 85,000 AMI meters• Hired Gibbs to sell VCS equipment• Began SEEM exploration• GOFER program recognized for

collecting half of all used motor oil recycled in state in 2019

• Grainger ash ponds converted to wetlands

• Set record for beneficially using/recycling ash and other CCRs

• Added 4,753 retail customers (+2.5%)

• Launched EmpowerSC, new energy management program for retail customers

• Storm response: Hurricane Isaias, spring tornados, mutual aid

• Won APPA RP3 designation again – we have maintained status since award launched in 2006

• Celebrate The Season tops $1M raised for charity

• Virtual education programs• Launched initiative to help expand

broadband in unserved areas• Succession planning underway• Formed Inclusion, Diversity and

Equity Awareness Council• Joined EPRI


~~antee cooper·




ATTESTATION:


Signature of Officer: --~--------1-- -------..~----+-~---------------


CRI.9 Please provide copies of the following documents that contain information related to the financial transactions announced by Santee Cooper on October 28, 2020. a. Presentations given to the Board of Directors and any subcommittees b. Board of Directors Meeting Minutes c. Investor communications d. All releases to the media.

CRI.9.a No additional responsive information

CRI.9.b No additional responsive information

CRI.9.c No additional responsive information

CRI.9.d The information listed was released to the media between 1/11/2021 and 2/10/2021. Copies are attached.

• Stakeholder Outreach Email Template 1.11.21.pdf

Emails and letters using this template were widely distributed to Santee Cooper customers, vendors, and other stakeholders, including elected officials

• Santee Cooper Progress Report Update.pdf • 1.11.21 Progress Report Card.pdf • 01-22-21 Media Email_Media Alert_Financial Condition.pdf • 2021-1-22-Santee-Cooper-is-in-Strong-Financial Condition.pdf • 01-29-2021 A look at Santee Cooper’s debt • About-the-Debt-of-Santee-Cooper-20210128.pdf • 02-01-21 Media Email_Media Alert_Broadband_Correcting Falsehoods.pdf • Correcting-Falsehoods-from-Gullah-Geechee-and-Small-Business-

Chambers.pdf

Outreach Email Templates

FROM: SUBJ: Santee Cooper 2020 Progress Update Dear [Name] – Over the past year, we have implemented reforms, changes and improvements to create a healthier Santee Cooper with stronger accountability, less debt and initiatives underway to deliver leaner, greener electricity. Together with our stakeholders, we:

1. Froze rates for 4+ years. While other utility customers could see their rates increase by more than 7% this year, we have frozen rates through at least 2024. Santee Cooper customers already have the lowest average residential utility bill from large utilities in the state, and because U.S. Energy Information Administration (EIA) data shows us among the top 1% of utilities nationally for reliability, Santee Cooper customers will continue to enjoy the most affordable and reliable power of any South Carolina utility for the foreseeable future.

Average Residential Rates Average Commercial Rates Average Industrial Rates 9% lower than the state

average 9% lower than national

average

8% lower than the state average

8% lower than the national average

17% lower than the state average

25% lower than the national average

2. Saved $347 million through debt refinancing (2019-2020). Santee Cooper refinanced nearly $570 million

of our debt in 2020 alone (and reduced that debt by 8 years) to take advantage of historically low interest rates without increasing overall debt. We have refinanced a total $730 million in debt over the two-year period.

3. Paid off over $600 million net debt (2019-2020), and in 2020 set $85 million aside to pay down a unique 2023 “balloon” debt obligation.

4. Improved our credit rating. Both Fitch and Moody’s revised their credit outlook for Santee Cooper from negative to stable, citing the settlement of legal liabilities and our recent debt refinancing deal as key contributors to their decision. An improved credit rating has, and will continue to, result in a lower cost of capital.

5. Greatly reduced legal liabilities including Cook case. Santee Cooper has resolved all outstanding nuclear plant-era lawsuits including a landmark $520 million settlement in the Cook case – of which Santee Cooper will pay $200 million – to deliver refunds to customers. These settlements put customers and taxpayers first.

6. Secured $160 million in projected annual average fuel and operating savings, a 13% reduction. Thanks to a new long-term and common-sense approach to resource planning, we have delivered real savings to customers by locking in today’s low energy prices through renegotiated contracts. To continue to drive efficiencies, invest in grid modernization, and free up resources to pay down our debt, we are exploring other money-saving agreements with neighboring utilities as well.

7. Created a more efficient, accountable, and diverse Santee Cooper. We disbanded Santee Cooper’s executive incentive pay plans, reduced our executive staff by nearly 20%, and lowered our overall headcount by 10% across the company. At the same time, we established Santee Cooper’s first Inclusion,

..

Outreach Email Templates

Diversity and Equity Awareness Council (the IDEA Council) and increased diversity at our highest executive levels from 3% in 2015 to 22% in 2020.

8. Advanced our vision for leaner, greener energy. To achieve a 55% reduction of carbon emissions by the 2030s, we are continuing with plans to close the coal-fired Winyah Generating Station by 2027, and have worked with Central to solicit bids for the construction of 500 MWs of solar generation from private solar companies – a major step toward establishing South Carolina as a leader in solar energy.

9. Supported economic development, COVID relief. We provided customers flexibility and relief throughout the COVID-19 pandemic and helped secure the creation of 1,300 South Carolina jobs and $609 million in new capital investment in 2020.

10. Enabling expanded broadband access. We have inventoried available capacity and will be using our over 5,000 miles of transmission lines to help enable the expansion of broadband to increase opportunities for economic development, education, telemedicine, and jobs in unserved and underserved areas of South Carolina.

11. Tied our best year ever for safety. 2020 tied Santee Cooper’s best year ever for safety with more than 1 million incident-free manhours. This achievement is a testament to Santee Cooper’s hard work and the dedication of our employees who embody our culture of safety and customer service.

12. Increased customer satisfaction. Santee Cooper continues to receive outstanding customer satisfaction ratings. Our 2020 retail ratings were an improvement from 2019, with industrial, commercial, and residential customers giving us satisfaction ratings of 100%, 96%, and 95%, respectively, in our annual customer survey.

Please find attached additional documentation of this progress, including a “progress report card”, a 2020 Progress Update presentation and a short informational summary detailing critical errors in recent Palmetto Promise Institute reports delivered to legislators and widely circulated elsewhere. We have additional information on our website at www.santeecooper.com/progress. Based on requests from customers and other stakeholders, we will provide additional informational summaries over the coming weeks, offering you important facts about our finances and operations. While much progress has been made, there is still more work to do. We recognize the need to continue making reforms and improving communications. We look forward to working together to deliver even more positive results for South Carolina in this new year. Please don’t hesitate to reach out to me directly via email at _____ or by phone at _____ if you have any questions, comments and concerns. [sig]

11111 -•

http://www.santeecooper.com/progress

Santee Cooper 2020 Progress

Update

~~antee cooper·

®What Is Santee Cooper?


• Named after the two rivers; created in the 1930s to bring light to rural South Carolina

• Manages a lake system and provides safe drinking water to 200,000 (and growing) people from the Lowcountry to Orangeburg County

• Provides electricity for more than 2 million South Carolinians

• Operates a high-voltage transmission grid that serves most of South Carolina; Santee Cooper power is delivered to every county in the state

• Santee Cooper operates a retail service territory with 2,994 miles of distribution lines and equipment serving more than 190,000 customers in Horry, Georgetown and Berkeley counties

~~antee cooper"

®Business Model


A public enterprise like Santee Cooper is a businessthat should provide its owners, the people of South Carolina, with returns –

• Low-Cost and Reliable Electricity




• And Now, Broadband

~~antee cooper"

®Lowest Rates

Customer Santee Cooper rate

% below state avg4

% belowNational avg5

Residential1 11.08 cents/kwh -9% -9%Commercial2 9.53 cents/kWh -8% -8%

Industrial3 5.09 cents/kWh -17% -25%

Santee Cooper is the low-cost provider among large utilities in South Carolina


1. Cent/kWh are calculated for 2020 based on published rate schedules for 1,000 kwh customer using ORS “Historic Electric Residential Bills” data. 2020 data is most recent external data.

2. Cent/kWh are calculated for 2019 based on total commercial revenue divided by commercial sales (EIA). ORS data does not exist for this class.

3. Cent/kWh are calculated for 2019 based on total industrial revenue divided by industrial sales (EIA). ORS data does not exist for this class.4. State average is composed of Dominion Energy South Carolina, Duke Energy Progress, and Duke Energy Carolinas for 2020 1,000 kwh/month customer for

residential and average 2019 cents/kwh for commercial and industrial (EIA data used for average cents/kwh).5. National averages are average rate per kwh for 2019 (EIA). Santee Cooper % below National avg is based on residential 2019 average rate per kwh.

Low prices mean more disposable income for customers

~~antee cooper

®

…And It Looks Like They’ll Stay That Way


___________________________


11.98 11.84

9.50 9.40

5.28 4.95

-

2

4

6

8

10

12

14

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

cent

s/kW

h


5Creating certainty while others raise rates

Rate Freeze

~~antee cooper

• •

®We Have Achieved Big Savings

(2019-2020)• Refinanced $730 million for $347 million in savings• Paid off over $700 million in long-term debt1 - Our debt has

gone down (not up) over $600 million, net of new borrowings• Board approved funding and committing an additional

$85 million to our Debt Reduction Fund for 2023 debt paydown• Reduced projected fuel and operating expenses 13% - over

$160 million a year (5-year average), through prudent resource planning and aggressive work to capture lower commodity prices

• Reduced staffing 10% and executive ranks almost 20%• Settled the Cook litigation, which provides customers $520M

in refunds and a 4-year Santee Cooper rate freeze

6

1. Includes $156mm in executed 2018 defeasance

Our customers will benefit from these savings

~~antee cooper"

®Operational Excellence

• Santee Cooper’s reliability ranks #4 (top 1%) out of over 550 IOU and co-op utilities in the U.S.

• Santee Cooper’s safety record has placed 1st among large utilities in American Public Power Administration (APPA), for 3 of last 4 years

• Santee Cooper has maintained APPA’s top designation for operational excellence since APPA began awarding it in 2006

7An effective and efficient operation benefits customers

~~antee cooper"

®Environmental Stewardship

• Santee Cooper recently bid 500 MW of new solar– Represents ~10% of existing generation

• Our 2020 Energy Resource Plan reduces coal 60%, increases renewables 400%, adds another 1,000 MW of solar by 2032, and reduces carbon emissions 55%

• We have recycled and beneficially reused over 4 million tons of ash and restored two major ash ponds to wetlands

• We had the first rooftop solar incentive program in South Carolina

date-unit no-pres n 8 o-8Building a leaner, greener future

~~antee cooper"

®Economic Development

• “Without Santee Cooper, there would not be Volvo… Santee Cooper has been a partner to the Department of Commerce every day that I’ve been in the job.”

• Through 2020, our economic development programs helped bring more than $15.3 billion in investment and 83,000 jobs to the state

• This year alone we worked with state and local governments, co-ops and others and helped attract a projected $609 million in investment and 1,300 jobs

9

Working with partners to create value across the State

- SC Commerce Secretary Bobby Hitt, 2018

~~antee cooper"

®Water Management

• We operate a federal hydroelectric project essential from Charleston to Orangeburg, beyond I-95

• Santee Cooper owns and manages lakes Moultrie and Marion (170,000 acres), and 22,000 acres of associated lands

• These lakes support $434 million in annual tourism spending and over 3,600 jobs

• These lakes also provide safe drinking water to more than 72,000 customers (~200,000 people) and that population is growing

date-unit no-pres no- 10

Managing water resources supports a healthy economy

~~antee cooper"

®Other Benefits

• Santee Cooper owns transmission poles, land rights and existing “dark” fiber that will be used to help create the “broadband backbone” for South Carolina

• Santee Cooper is fully supported by customer revenues and contributes 1% of gross revenues to the State every year (~$17 million)

11Providing benefits for all South Carolinians

~~antee cooper"

®Strategic Financing

• Our recent bond transaction resulted in:– An overall interest rate of 2.86% (the lowest-cost financing for

Santee Cooper in recent years)– Refinancing savings of over $330 million for customers– $100 million of new proceeds for long-term system investments,

while still contributing to an overall debt decline in 2020 – An order book that was 5.5x over subscribed and included some

of the world’s most sophisticated institutional bond investors

• The ORS verified the transaction complied with Act 135 Section 11(E)

• Santee Cooper’s “Stable A” credit ratings are in line with the top 4% of all investor-owned utilities in the nation

date-unit no-pres no-12 12Making sound financial decisions

~~antee cooper"

®We Anticipate…

• Keeping prices stable over the long term,• Achieving substantial emissions reductions,• Meeting increasing demand for drinking water,• Maintaining focus on economic development,

reliability, safety and stewardship,• Providing critical infrastructure for broadband, and• Working with the General Assembly to enhance

transparency

Santee Cooper is an asset of, and to, South Carolina 13

~~antee cooper"

Providing Safe, Affordable, Reliable Power • Maintained position as the lowest-cost provider among large South Carolina utilities • Locked in $120 million in anticipated fuel savings through 2024 • Tied our best year ever for safety • Achieved top 1% for reliability nationally (#4 out of more than 550 investor-owned utilities and electric cooperatives) • While other utilities are raising rates, Santee Cooper projects price stability through 2030


Substantially Improved Financial Health • Refinanced $730 million in debt to save more than $347 million (2019-2020) • Reduced debt by $600 million net, and set aside $85 million to prefund a

unique 2023 debt payment (2019-2020) • Maintained financial metrics that support “A” credit rating • Reduced projected fuel and operating expenses 13% - over $160 million a

year (five-year average) • Improved financial outlook issued by 2 of the 3 credit rating agencies • Reduced legal risks

Cook – Settled Glibowski – Settled WEC – Settled Turka – Settled (pending final approvals) Century/Goose Creek – Negotiations ongoing toward a resolution

Increasing Accountability

• Disabled Executive Incentive Plans • Reduced budgeted staffing 10% (from 2017) • Reduced executive staff nearly 20% • Adopted Pricing and Resource Planning Principles • Increased executive diversity from 3% in 2015 to 22% in 2020 • Established Inclusion, Diversity and Equity Awareness Council • Achieved customer satisfaction level exceeding national average

Progress Report Card Santee Cooper

2020

Rate Freeze

14

12 11.98 11.84

10 ~

~ 8 .:.!

---V, .... 6 c::

a, u

9.50 n__ 9.40 - ,_ - ,_ ,- ,_ ,_ - - - - j 5.28 4.9 - ..... 5

4 • . • .. ff .. ~

2

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

• Residentit l Cornrnercii1 I • Industrial (ll

lndustnal rates based on aggregate sales. mcludmg non-firm

Over a II Satisfaction

r~u1on.al Norm

ll.4

S&P IOU Ratings Distribution

, - ---------- ---"A" or Higher - - , Santee Cooper's

"A-"

"BBB+"

"BBB"

"BBB-

27' ,

; "A· rating is in line ; with the top 4% of ; a/1/0Us

: Average IOU ¼•', -7 company rating is

c~BBB+: ____________ _

Befow " 1:,Bll:81.tBi:-.::" _ _. __ ._ __ _

Delivering Leaner & Greener Energy • Developed updated resource plan jointly with Central Electric Power Cooperative • Purchasing 500 MW of new solar energy through power purchase agreements jointly with Central • Idled Winyah Unit 4 and planned retirement of remaining three units • Hedged fuel needs to ensure certainty of costs through 2024, consistent with Act 135 • Planning for diverse, low capital, flexible, modular resource mix Santee Cooper Energy Mix in the 2030s: Leaner, Greener and More Diversified

(Projected 55% reduction in carbon emissions by the 2030s)

Disclosure and Transparency • Board approved Resource Planning and Pricing Principles that improve stakeholder engagement • Providing monthly and supplemental reports (7,684 pages) to the Office of Regulatory Staff and publishing these on

Santee Cooper website • Provided 21,459 pages of reports and documents responding to an information request from the S.C. House Office of

the Speaker • Published 2020 Integrated Resource Plan on Santee Cooper website • Published 2020 Official Statement on Santee Cooper website • Increased reporting to customers Strengthening Communities • Provided site development loans, grants and other support to state and local governments, electric cooperatives and

other organizations across the state to help attract >1,300 jobs and $609 million in economic development investment • Developing broadband program to support providers in statewide rollout to unserved areas • Santee Cooper’s 1,600 employees live in approximately 30 counties across South Carolina

9%

OLD ROADMAP

• Now Purchosod Powor Agroemont

• Now • Economy Oas Purchosos

Sustainablo R OSOUl'COS

19%

2020 RESOURCE

PLAN

19%

Nuoloar

10%

• Existing Qas Coal

1

Aiello, Nicole

From: Aiello, NicoleSent: Friday, January 22, 2021 2:44 PMSubject: Santee Cooper's Financial Condition

Media FYI:

Santee Cooper continues to communicate its progress and how it is increasing value to their customers and the people of South Carolina. We are providing details about our financial condition, which you can find at www.santeecooper.com/progress.

2020 financial metrics are preliminary and subject to change

Santee Cooper Is In Strong Financial Condition

Three Key Takeaways:

• Actions taken in 2020, including reducing operating expenses and settling the Cook litigation, allow us to meet terms of the rate freeze, continue to reduce debt, and implement our leaner, greener resource plan.

• Our stable “A” credit rating aligns with the top 4% of U.S. investor-owned utility holding companies and our metrics will continue to support that rating.

• After the payment of all debt service, operating expenses and payments to the State, Santee Cooper will have more than $150 million each year during the rate freeze period to invest in capital needs and accelerate debt paydown above and beyond regularly scheduled debt retirement.

Santee Cooper enters 2021 in strong financial condition, which positions the company well for continued, successful execution of key components of the Reform Plan. Santee Cooper had “A” rated financial metrics for 2020, enjoys robust liquidity and access to capital, and has resolved all significant litigation against the company. In this paper, we summarize the state of Santee Cooper’s financial condition, address concerns about our finances raised by third parties and examine how the national credit rating agencies and bond investors assess our financial strength. Accomplishments in 2020: Santee Cooper has continued to execute on key components of the Reform Plan since its submission to the Department of Administration in the Act 95 process and to the extent permitted by Act 135. Select accomplishments include the following:

• Reduced operating costs and headcount to deliver strong financing and operating results despite the impact of COVID-19

• Issued a Request for Proposals (RFP) to solicit up to 500 megawatts of solar generation, jointly with Central, and executed the first of the contracts originating from this RFP

• Refinanced debt at attractive interest rates, producing $134 million of net present value savings to customers

• Settled all significant remaining litigation against the company including the Cook case which resulted in a 4.5 year rate freeze for customers

• Proactively managed risks during the rate freeze period by hedging future gas and coal costs

Resolution of the Cook case removed significant legal uncertainty for Santee Cooper and was identified by the national credit rating agencies as an important positive development for our financial profile. The settlement provided for $520 million of payments to customers, of which Dominion funded $320 million and Santee Cooper is funding $200 million. Some third parties have erroneously claimed that Santee Cooper will be unable to fund these payments, but we have recorded the full $200 million expense in our financial statements for 2019, already made the initial $65 million payment in 2020, and the remaining payments to be made in 2021-2022 are fully reflected in our financial forecasts, including the credit metrics presented herein.

~~antee cooper·


“A” Rated Financial Metrics: The national credit rating agencies, banks and bond investors evaluate Santee Cooper and other public power companies using three primary financial metrics: Debt Service Coverage, Days Cash or Liquidity on Hand, and Debt/Capitalization. Santee Cooper’s metrics in these three categories currently support our “A” category ratings and these metrics are projected to remain in the “A” category, as recently reviewed and validated by the credit rating agencies. Our “A” rating is higher than the rating of 96% of US investor owned utility holding companies, including all of the investor owned utilities serving customers in South Carolina. Debt Service Coverage: This statistic is a measure of the company’s ability to pay principal and interest over time. As presented in the table below, excluding the Cook settlement charge, Santee Cooper has Debt Service Coverage between 1.31 and 1.42x in the historical and forecast period from 2018-2024. This means that Santee Cooper has “cushion” of 31% to 42% over and above annual debt service payments and after paying all operating expenses and the annual payment to the State. In the period 2021-2024, this “cushion” ranges between approximately $150 million and $200 million each year. This excess cash is available to invest in the utility system, accelerate the repayment of debt and provide for contingencies. It is important to note that Santee Cooper, like other public power companies, issues primarily amortizing debt, which requires payment of principal along with each interest payment like a home mortgage. Investor owned utilities by contrast tend to issue “bullet” bonds which pay interest-only until the principal amount is payable in total at maturity. Because Santee Cooper has amortizing bonds, we are regularly paying down principal over the life of the debt. And the 31% to 42% “cushion” is after the payment of BOTH principal and interest. Over the Reform Plan forecast period, Santee Cooper will pay down debt through normal amortization and use a portion of the “cushion” to further accelerate debt reduction. In total, these debt payments are forecast to exceed the amount of new debt Santee Cooper raises to invest in new equipment which results in continued reduction in the total amount of Santee Cooper debt. Some observers have incorrectly suggested that Santee Cooper is “underfunded” and must choose between making debt payments and funding capital expenditures. As evidenced by our Debt Service Coverage statistics, that is not the case.

2018 2019 2020 2021 2022 2023 2024 Debt Service Coverage 1.42x 0.87x* 1.31x 1.38x 1.42x 1.31x 1.37x

*Includes the $200 million Cook charge recorded in 2019. Without the one-time charge, the adjusted DSC would have been 1.32x.

Days Cash or Liquidity on Hand: Days Cash on Hand measures the number of days of cash available and represents the ability of the company to fund its operations from existing cash resources. Days Liquidity on Hand measures both unrestricted cash and available bank credit line capacity against daily operating cash needs. As shown in the table below, Santee Cooper’s historical and projected Liquidity on Hand exceeds 330 days, which is consistent with a AAA rating (the highest rating awarded by the credit rating agencies). More importantly, our Cash on Hand comfortably exceeds our 90 days target during the rate freeze years as we set aside cash for unforeseen contingencies. By the end of the rate freeze in

=


2024, this contingency amount (approximately $70 million) will be deployed to reduce debt. It is important to note that our financial forecast, including these liquidity calculations, includes the impacts of Cook settlement payments. Said differently, our cash and liquidity levels after making Cook settlement payments comfortably exceed the targets for an ‘A rated’ utility.

2018** 2019 2020 2021 2022 2023 2024 Days Liquidity on Hand* 531 343 345 342 376 331 356

Days Cash on Hand 286 157 152 148 118 115 93 *Days Liquidity On Hand is based on the unused portion of the current $850 million of bank credit lines maintained by Santee Cooper. ** High levels of cash and liquidity in 2018 due to availability of Toshiba settlement funds which have since been fully used to reduce debt.

Debt/Capitalization: This statistic measures total debt divided by the total of debt and equity on our balance sheet. Our debt/capitalization in the historical and forecast period of 2018-2024 supports our “A” rating and is in line with other generation and transmission-oriented public power companies. As shown in the table below, Santee Cooper’s projections provide for significant debt repayment over time which will continue to improve our already strong debt/capitalization. The reduction of debt over time results from principal payments on existing debt exceeding the amount of new debt raised over time to fund new equipment.

2018 2019 2020 2021 2022 2023 2024 Debt to Capitalization 76% 77% 76% 75% 74% 74% 73% Debt Outstanding ($bn) 7.3 6.9 6.8 6.6 6.5 6.2 5.9

Strong Financial Condition Validated by Third Parties: Santee Cooper’s robust financial condition is recognized by sophisticated financial market participants, including the rating agencies that recently upgraded our credit outlook, large investors who subscribed to our recent bond sale at record low interest rates, and banks that continue to offer us credit lines. The Three National Credit Rating Agencies Rate Santee Cooper in “A” Category: Santee Cooper maintains a credit rating from Standard & Poor’s, Moody’s, and Fitch Ratings. These ratings are used by banks and bond investors to gauge the credit quality of companies to which they lend funds. All three of these agencies provide an “A” category rating for Santee Cooper which is a high investment grade rating. In October 2020, two of the rating agencies upgraded Santee Cooper’s rating outlook to “Stable”, citing the settlement of Cook and their expectation that our financial metrics will remain consistent with the rating through the rate freeze period. Proven Access to Capital Demonstrated in Recent Bond Financing: In October, Santee Cooper raised approximately $638 million in taxable and tax-exempt bonds, the majority of which refinanced existing debt at lower interest rates. The bonds were purchased by some of the largest, most sophisticated institutional investors in the world. The order book for the bonds was oversubscribed by over 5.5x, meaning there were approximately $3.5 billion of orders for the bonds from these investors. This robust demand allowed Santee Cooper to issue the debt at an interest rate of approximately 2.9% for bonds with


an average maturity of 13 years. The success of this bond offering demonstrates that expert third party investors validate the strength of our financial condition. Furthermore, Santee Cooper continues to maintain $850 million in aggregate bank facilities from leading financial institutions of which $650 million was successfully renewed in 2020. Optionality: Santee Cooper’s resource and financial plans are infused with a great deal of optionality to enable responsiveness to changing conditions. For instance, if load declines, the retirement of the Winyah Generating Station can and should be accelerated. If load grows faster than anticipated, the anticipated gas-fired resource, second tranche of solar, and batteries now anticipated for the later 2020s would need to be advanced. The option remains open as to whether to build or buy such resources – no decisions have been made in this regard, and shouldn’t be until required. Conclusions:

• Santee Cooper has strong, investment grade financial metrics and major litigation risk has been mitigated

• Credit rating agencies, banks, and sophisticated investors validate our financial strength • After the payment of all debt service, operating expenses and payments to the State,

Santee Cooper will generate in excess of $150 million each year to invest in the utility and accelerate debt paydown

• Santee Cooper’s debt balance will continue to decline as principal payments on existing debt exceed the amount of new debt raised to fund new equipment

• This strong financing condition provides the foundation for the execution of Santee Cooper’s Resource Plan and key components of Santee Cooper’s Reform Plan, which will transform our electric generation fleet, maintain our world-class reliability and safety, continue our important economic development efforts, pay down our debt, and maintain the lowest utility rates among large utilities in the state of South Carolina

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Aiello, Nicole

From: Aiello, NicoleSent: Friday, January 29, 2021 11:15 AMSubject: A look at Santee Cooper's debt

Media Alert

Jan. 29, 2021 – Santee Cooper continues to share information, based on questions we received, detailing steps taken to lower costs and increase our value to customers and others to whom we are accountable. Here is a look at our debt – what we have paid down and our outlook – along with a request from a state Senator and our response to him. Three key takeaways in the debt information paper:

The security of Santee Cooper’s bondholders depends, in large part, on whether Santee Cooper remains intact as a “system.” For instance, Santee Cooper has an opinion of bond counsel (bond counsel represents the bondholders, not Santee Cooper) that major asset classes like the transmission or generation sub-systems could not be severed from the greater Santee Cooper system without paying off all outstanding debt of the entire system.

Santee Cooper has essentially flat principal and interest payments well into the 2030s, declining thereafter. This clearly supports long-term customer price stability.

Santee Cooper’s debt has been, and will continue, going down, not up. These documents and more are online at www.santeecooper.com/progress.

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About the Debt of Santee Cooper Three Key Takeaways:

• The security of Santee Cooper’s bondholders depends, in large part, on whether Santee Cooper remains intact as a “system”. For instance, Santee Cooper has an opinion of bond counsel (bond counsel represents the bondholders, not Santee Cooper) that major asset classes like the transmission or generation sub-systems could not be severed from the greater Santee Cooper system without paying off all outstanding debt of the entire system.

• Santee Cooper has essentially flat principal and interest payments well into the 2030’s, declining thereafter. This clearly supports long-term customer price stability.

• Santee Cooper’s debt has been, and will continue, going down, not up. Santee Cooper is a “public power” utility, meaning it is owned by the public, not

stockholders. Santee Cooper has no stock. There are many such entities in the United States – the New York Power Authority, the Nebraska Public Power District, Los Angeles Department of Water and Power, the Jacksonville Electric Authority, and the Salt River Project in Arizona are but a few. These entities were created at different times (Santee Cooper is about 85 years old) and for reasons that may vary somewhat by region, but the common theme amongst these companies is that they are publicly owned, created to deliver specific benefits and are economic development engines for their areas. They support the health and growth of their economies by providing low-cost and reliable energy, and in some cases, water, among other benefits.

Having no stock, all of these companies are financed exclusively with a mix of internally

generated funds and borrowings. Because they have no stock, these companies tend to have higher debt, or leverage, ratios than their private counterparts. The borrowings of these companies are generally secured not by a lien on assets but with a pledge of “system revenues” – meaning, the aggregate revenues derived from all of their system assets (generation, transmission and distribution assets). There is a “lien” on revenues.

Santee Cooper is financed this way. The “system” is the sum total of both electric and

water assets, and this lien on revenues is in fact a first lien. The significance of this “system” approach to financing (as opposed to a “project”, or asset by asset approach) is that parts and pieces of the “system” cannot be severed from the whole (thus losing the revenues therefrom) without injuring the security (revenues) which backs all the borrowings. For instance, Santee Cooper has an opinion of bond counsel (bond counsel represents the bondholders, not Santee Cooper) that major asset classes like the transmission or generation sub-systems could not be severed from the greater Santee Cooper system without paying off all outstanding debt of the entire system. We addressed this issue in response to a request from a member of the General Assembly, and that response is attached.

Santee Cooper’s status as a publicly owned, governmental entity, allows it to enjoy and

use the benefits of tax-exempt borrowing, a benefit that is passed down to Santee Cooper’s customers. “Tax-exempt” means the interest on such borrowings is not subject to federal income taxation, which of course tends to reduce the cost of borrowing. This is a tax privilege granted to governmental entities, but it is not, by and large, granted to their private investor-owned counterparts. They enjoy other tax benefits. Santee Cooper’s unique status enables it to keep the costs of capital lower than it otherwise would be if Santee Cooper were a private entity.

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Loss of the tax privilege granted to Santee Cooper as a public entity would likely require recapitalization of the company. This replacement capital would likely be a combination of stocks and new, different debt, both of which would tend to be higher cost than the tax-exempt debt they replace. To suggest that any Santee Cooper debt obligations simply “go away” is to infer they never come back. They may change form, but it is unlikely they disappear. For instance, NextEra’s own proposal of 2020 (per an analysis by Centerview Partners in February 2020) is illustrated below, and it seems clear their proposal was simply to replace Santee Cooper’s capital with a higher cost mix of stock and new debt instruments.

Santee Cooper’s cost of capital tends to be lower than an IOU’s, and is also more stable

and predictable. It is not influenced by expectations of stock market returns, as Santee Cooper has no stock. Moreover, Santee Cooper uses a “mortgage style” repayment structure of principal and interest over the life of its debt. This repayment structure (level debt service) provides for consistent, predictable debt service payments year-to-year, regular paydown of principal, and cost stability for customers. Santee Cooper’s current debt repayment schedule, which is already reflected in Santee Cooper’s prices, is illustrated below, and you can see that not only is there heavy principal payoff throughout the schedule, but also total P&I debt service is basically flat through the mid-2030’s, and thereafter declines. The average life of this debt is 18.5 years.

Santee Cooper vs. N,extEra Financing Obligations and Costs

Projected Finondng Obligations (1020E)

Debt T ot:al debt outstanding at YE 2020 in Reform Plan

~$6.7

$.i.ntee Co oper

-$7.0

N extEra

lllustr-atJve Wei g hted A ver-age Cost of C apit al

Financing Weighted

Securitization

Rate Base Debt

Rate Base Equ ity

Cost Contribution

2.28%(0 0.43%

3.19%"' 1.24%

12.85%m S.43%

NextE.ra W e ighted A verage

Memo: Santee Cooper

7. 10%

3.74%''1

Rate S a5e Equity

Rote Base Debt

Based O!l"I 52.2% equiry ratiot>> and $5,650mm rate base!•l

fused on 47.8% debt mtio!5l and $5,6$0mm rat£ baset•i ___,

fused on $1,32.Smm secu ritiz.ation -----; Securit izotion

in NextlEra proposaWl

Note: NextEr2 figures bosed on DOA report publi,hed on Febru2ry 11. 2020 2nd Next!:..-. '":we Prof>OS•I'· fl"blished on its investor re !ions website. ( I) c.lcul2ted,. I0-Ye2r Tre2<ury Rote + 7Jbp,. Tre2<ury r2teof 1.55%,s o< Febru,ry 16. 2020. 7Jbp, represents the ,pre2d to tre,sury for

securitizod debt in NextEn 's bid (disclosed on page 17 of lh e Ne><tEr2 n le proposal). (2) Reflects normaJized interest rate for NextEn nte base debt (disc losed on poge 77 of DOA r"ll'ort). (3) 8,sed on 2llowed ROE of W.2% from NextEr. bid (disclosed on p•ge 90 of DOA report). Cost to r2rep2yer include, recovery of feder2I and

stale corporate bx on IA!! ROE (2 1 % 2nd 5%. resJ>eClh'ely). ( f ) P...ff!ects aver2ge yield to a ll on S.ncee Cooper debt.

(5) From NextEr2 bid (disclosed on p•g• 90 of DOA report). CENTER IVIEW PAllTNEru (6) From NextEr• bid (disclos ed on page Hof DOA report). (7) From NextEr2 bid (disclo, ed on p•g• 15 of NextEr2 ,ale propos,I).

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This chart does not include principal payments in 2023 for which Santee Cooper will set aside funds in March 2021.

It is true that Santee Cooper – or any utility for that matter – will have needs periodically

for new borrowings. This is because equipment wears out and needs to be replaced, and of course system growth may necessitate system expansion. However; Santee Cooper is now retiring old debt more rapidly than it has need for new debt, and thus total debt is decreasing, not increasing. This is illustrated in the chart below, taken from Santee Cooper’s published balance sheets from 2010-2020. This shows that Santee Cooper debt grew from 2010 to its peak in 2016 by $2.9 billion predominantly as a result of the nuclear project, and thereafter has steadily declined $1.4 billion by the end of 2020. Given heavy principal amortization already embedded in the debt repayment schedule of Santee Cooper, and assumed refinancing savings, debt is forecast to decline to 2010 levels in the latter 2020’s.

0

50

100

150

200

250

300

350

400

450

500

Mill

ions

FY 12/31

Principal Interest

11 I I

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In conclusion,

• The security of Santee Cooper’s bondholders depends, in large part, on whether Santee Cooper remains intact as a “system”. For instance, Santee Cooper has an opinion of bond counsel (Bond Counsel, represents the bondholders, not Santee Cooper) that major asset classes like the transmission or generation sub-systems could not be severed from the greater Santee Cooper system without paying off all outstanding debt of the entire system.

• Santee Cooper has essentially flat principal and interest payments well into the 2030’s, declining thereafter. This clearly supports long-term customer price stability.

• Santee Cooper’s debt has been, and will continue, going down, not up.


$9.0 $7.7

$8.2 $7.9

$8.0 $6.9

$7.3 $6.9 $6.8 $6.8

$7.0 $5.9

ti) $6.0 $5.3 $5.5 c::

i 0

- $5.0 a3

T $4.0

$3.0

$2.0 Debt level before Debt peaks

Santee Cooper $1.0 began nuclear

$0.0 borrowing

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Aiello, Nicole

From: Aiello, NicoleSent: Monday, February 01, 2021 3:36 PMSubject: Santee Cooper shares broadband info, corrections to falsehoods

Media Alert Feb. 1, 2021 – Santee Cooper continues to reach out to stakeholders, giving them easy access to basic and important operational details and facts about the state-owned electric and water utility. Today, Santee Cooper is sharing two more pieces:

1. A summary of Santee Cooper’s anticipated role in expanding broadband access to unserved portions of South Carolina.

2. Santee Cooper’s corrections to “15 Falsehoods,” a mistake-filled narrative promoted by the Small Business and Gullah Geechee chambers of commerce. (This document is our response to the S.C. House Ad Hoc Subcommittee Chairman’s recent request that we provide such corrections.)

These documents and more are available online at www.santeecooper.com/progress.

Correcting “15 Falsehoods” by Gullah Geechee and Small Business chambers Note: This writing responds to the recent request by the Santee Cooper Ad Hoc Committee of the House asking Santee Cooper to review a report that legislators received, jointly authored by the South Carolina Small Business Chamber of Commerce and the Gullah Geechee Chamber of Commerce. Both the Santee Cooper enabling statute and Act 135 restrict certain activities by Santee Cooper related to a sale. We have and we will continue to operate within those restrictions and have consulted with outside legal counsel to ensure our response to the Committee’s direct request is not violative thereof. Like the Small Business-Gullah Geechee chambers’ earlier “No Longer an Asset” publication, “15 Falsehoods” is full of false and misleading information comparing Santee Cooper to NextEra Energy. For the sake of brevity, we will focus here on “pocketbook” and resource matters. For example, this publication states:

• “False: Santee Cooper is reducing the debt for customers” – In fact, Santee Cooper HAS paid off $600 million in debt – net – in 2019-2020 and is firmly on track to continue aggressively reducing outstanding debt – including the Board’s decision to set aside another $85 million for a large debt payment that comes due in 2023. We are also refinancing debt and have achieved $347 million in debt service savings for customers in 2019-2020.

• “False” Santee Cooper’s rates are lowest in the state and lower than a for-profit utility can offer” – In fact, Santee Cooper DOES offer the lowest average monthly bill for a typical residential customer among the largest electric utilities serving South Carolina, including the three investor-owned utilities doing business in this State. The only logical comparison is total bills (i.e. what comes out of customers’ pockets), including base rates and fuel and other adjustments. At 2020 rate levels, the typical Santee Cooper residential customer pays an average $110.78 a month, compared to $122.98 for Dominion, $122.59 for Duke Progress and $120.54 for Duke Carolinas. Our price is clearly the lowest, even with nuclear debt service included. Our rates are also lower than the national average for all retail customer classes. (Central Electric Power Cooperative has expressed concerns about our wholesale power costs compared to other utilities serving the co-ops.) The DOA’s 2020 evaluation of our Reform Plan and NextEra’s bid showed our rates would be lower than NextEra’s through the 20-year review period.

• “False: Santee Cooper is quickly going green” and “False: Santee Cooper can successfully implement its Reform Plan” – In fact, Santee Cooper’s “leaner, greener” 2020 Resource Plan (which improves on the generation mix in our 2019 Reform Plan) is well underway, with contracts being executed for approximately 500 MWs of new solar right now. We ARE working with Central Electric Power Cooperative, executing contracts each for our proportionate system load, and those solar projects will come online over the next year or so. We’ll gather best practices from this first phase and use it to bring up to another 1,000 MWs of solar online by 2032. On Dec. 31, 2020, Santee Cooper idled coal-fired Winyah Generating Station Unit 4, and we are progressing with plans to formally retire Units 3 and 4 by 2023 and the remaining two units by 2027. We are squarely on track to execute the 2020 Resource Plan and reduce carbon emissions 55% by the 2030s. Santee Cooper’s Resource Plan (and preceding Reform Plan) calls for almost twice as much new solar power – and 4X more battery storage – than NextEra’s bid.

• “False: Santee Cooper is financially stable” (the report highlight’s NextEra credit ratings of A-, A- and Baa1) – Santee Cooper has stable “A” rated financial metrics, enjoys robust

liquidity and access to capital (as evidenced by the broad and deep response by investors to our 2020 bond offering and recent renewal of credit facilities with banks), and has resolved all significant litigation against the company. Santee Cooper’s credit ratings are slightly better than NextEra’s: A, A- and A2 from the same three major credit rating agencies. Our strong credit ratings align with the top 4% of ratings for all investor-owned utility holding companies nationally.

“15 Falsehoods” also mischaracterizes points about NextEra and its 2020 bid to purchase Santee Cooper, which the legislature rejected. Some of the more egregious examples include:

• P. 2 and paraphrased elsewhere- “The NextEra offer would have erased the nuclear construction debt…” In fact, NextEra’s bid would merely replace nuclear construction debt with new NextEra debt and equity that would require a 10% profit margin from Santee Cooper customers. And the cost of that debt would be more expensive than the cost of Santee Cooper’s debt, which, when coupled with the equity profit margin, is one reason NextEra’s projected rates were higher than Santee Cooper’s.

• Pp. 8: Prior to any rate increase, NextEra “would be required to go through a lengthy and costly regulatory process…” The fact is, NextEra’s bid required the legislature to preapprove a resource plan that would add a large natural gas generating station and 800 MW of NextEra-built solar power (Santee Cooper’s plan calls for 1,500 MW of solar, purchased in a phased approach from third-party developers and so eliminating up-front capital costs). By writing those projects into the legislation, NextEra sought to eliminate regulatory oversight on those projects, build them and then gain regulatory approval to include those costs in its rate base. This capital-intensive, utility-built resource plan is another reason NextEra’s projected rates were higher than Santee Cooper’s.

• Jobs and benefits: This report claims that a sale to NextEra will be better for retirees and will not “decimate jobs and hurt the local economy.” The fact is, NextEra’s bid would have eliminated over 700 Santee Cooper jobs (about 45% of the workforce). By comparison, Santee Cooper’s plan eliminated approximately 150 jobs over time (through 2027, associated with the Winyah retirement and likely all through attrition). Also, Santee Cooper currently defrays health insurance costs as a retiree benefit, which NextEra would not continue according to its bid. That would increase annual costs to retirees by $4,800 per retiree with individual coverage and $9,600 per retiree for family coverage.

The Small Business/Gullah Geechee report includes a number of mischaracterizations and flawed comparisons involving Santee Cooper’s economic development, environmental stewardship, community support and reliability/storm preparedness. We have very strong records/rankings in each of these areas (for example, we rank #4 in reliability among more than 550 investor-owned utilities and cooperatives nationally) and so we will let the real facts speak for themselves on these.

We do want to address the report’s claims that Santee Cooper is actively demonstrating “lack of transparency and intentions of maintaining its lack of accountability.” In 2020, Santee Cooper updated and improved our leaner, greener resource plan and began implementing it; substantially improved our financial health in part by reducing projected fuel and operating expenses by 13% a year average over 5 years, executing debt defeasance and refinancing and settling all significant nuclear-related litigation; and continued delivering low prices, reliability in the top 1% nationally, and best-ever safety (tied with 2018, our best year). We are following through on those commitments. We also improved accountability and transparency. The Board adopted Pricing and Resource Planning Principles in 2019 that will improve the breadth and frequency of stakeholder involvement in those areas, disabled executive incentive plans and reduced the executive staff nearly 22%, and established an Inclusion, Diversity and Equity Awareness Council to help us improve training and practices in those areas. We published our 2020 Integrated Resource Plan and 2020 Official Statement to our website. We have also increased reporting to customers, through more informative and frequent emails and better use of other customer outreach tools. We are providing monthly and supplemental information submissions to the Office of Regulatory Staff and publishing these on the Santee Cooper website (and to date, the ORS has found no violations of Act 135 11(E)). We know there are concerns that we did not proactively communicate all the details of our 2020 bond transaction. We regret that and are working harder to ensure stakeholders are informed and engaged about our activity at the earliest opportunity. We have also worked with legislative staff to support their efforts to devise meaningful reforms of governance and oversight and look forward to continuing that process. In closing, the Small Business/Gullah Geechee report is full of information taken from old reports, other incomplete and erroneous third-party research, and media reports and other information taken out of context.




Name Pamela Williams Title Chief Public Affairs and General Counsel Phone 843-761-7043 Email Pamela. williams(a)santeecooper.com

ATTESTATION:


Signature of Officer: --~------,.- ------1a,.__------t--~--------------

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