Relief may be in sight for S.C. Electric and Gas customers who have paid nearly $2 billion for an abandoned nuclear power project.
Richmond, Va.-based Dominion Energy is set to acquire Cayce-based SCANA Corp. in a $14.6 billion deal that would include refunds to SCANA subsidiary SCE&G customers. Residential customers, still paying $27 a month for the twin nuclear reactors located at the V.C. Summer plant near Jenkinsville, could receive up to $1,000 as part of a $1.3 billion cash payment within 90 days of the stock-for-stock merger’s completion.
Dominion will work with state regulators to determine refund amounts based on usage.
The merger is expected to take effect by the third quarter of 2018. It is subject to federal regulatory approval as well as approval by SCANA shareholders. SCANA and Dominion Energy will also seek approval from the public service commissions of South Carolina, North Carolina and Georgia.
In a conference call Wednesday morning, Dominion chairman, president and CEO Thomas Farrell said he has spent time talking with members of the S.C. legislature and believes his company has come up with a fair proposal.
“We know the state well, and think we’re providing fair benefits,” Farrell said. “Everyone seems pleased with where things stand right now.”
Farrell said during a press conference Wednesday afternoon that Dominion has no plans to rejuvenate the V.C. Summer project.
Dominion supplies electricity to parts of Virginia and North Carolina as well as natural gas to parts of West Virginia, Ohio, Pennsylvania and eastern North Carolina. It is also the primary developer of the $5 billion Atlantic Coast Pipeline, a natural gas conduit with a planned 550-mile route through Virginia and North Carolina.
Dominion published a presentation on the merger Wednesday.
SCANA, the subject of lawsuits, federal subpoenas and public outrage in the wake of the nuclear project’s collapse, expressed optimism about the merger.
“Dominion Energy is a strong, well-regarded company in the utility industry, and its commitment to customers and communities aligns well with our values,” said Jimmy Addison, SCANA CEO. “Joining with Dominion Energy strengthens our company and provides resources that will enable us to once again focus on our core operations and best serve our customers.”
The projected cash payment would reduce the average SCE&G customer’s rates by 5%, or more than $7, a month. In addition, a $1.7 billion-plus write-off of existing V.C. Summer capital and regulatory assets would eliminate all customer costs related to the project over 20 years, faster than the 50-60 years proposed by SCE&G in November.
SCE&G’s customers have paid $1.8 billion in higher rates toward the nuclear project, abandoned by the SCANA subsidiary and co-owner state-owned utility Santee Cooper after contractor Westinghouse filed for bankruptcy in April. The project’s decade-long construction encountered a series of delays and rising costs, with SCANA seeking and receiving state regulatory permission for nine rate increases under the controversial Base Load Review Act, a law passed in 2007 that allowed those increases before the project’s completion.
On Thursday, Westinghouse agreed to be acquired by Brookfield Business Partners L.P. for approximately $4.6 billion. The acquisition is expected to close in the third quarter of 2018 and is subject to bankruptcy court and regulatory approval.
In the Dominion merger, each SCANA shareholder would receive about two-thirds of a Dominion share, or slightly more than $53 per share, based on Dominion’s Tuesday closing price.
SCANA would operate as a wholly owned subsidiary of Dominion and maintain its local management structure and SCE&G headquarters in South Carolina. Dominion Energy also pledged to give $1 million a year in increased charitable contributions in SCANA communities for at least five years, and promised SCANA employee protections until 2020.
Reaction to the proposed merger was more positive than the skepticism that met an SCE&G offer in November of approximately $4.8 billion in rate relief to residential and industrial customers projected to reduce annual rates by 3.5%.
That proposal also included an offer to buy a $180 million natural gas facility in Calhoun County at no cost to customers. Dominion would buy the same plant.
Gov. Henry McMaster said the merger represented progress but doesn’t address the rate increases faced by Santee Cooper customers. Dominion was one of several companies approached by McMaster as the governor shopped the troubled state utility, saddled with $4 billion in V.C. Summer-related debt.
“Under the proposed agreement between SCANA and Dominion Energy, SCE&G ratepayers will get most of the money back they paid for the nuclear reactors and will no longer face paying billions for this nuclear collapse,” McMaster said in a statement. “But this doesn't resolve the issue. ... The only way to resolve this travesty is to sell Santee Cooper.”
Speaker of the House Jay Lucas called the proposed acquisition “an interesting starting point” in a statement. “However, I believe more can be done to provide ratepayers with the relief and protections they deserve,” said Lucas, who said the House would continue pressing forward with a six-bill Utility Ratepayer Protection package.
Environmental organization Friends of the Earth called the merger a “take-it-or-leave-it deal” that “falls far short of protecting ratepayers from absorbing the costs of the nuclear fiasco.” Friends of the Earth and the Sierra Club have a complaint pending before the S.C. Public Service Commission seeking rate relief.
The failed nuclear reactor project, into which SCE&G and Santee Cooper sank a combined $9 billion, has resulted in leadership shakeups at both utilities. Santee Cooper board chairman Leighton Lord resigned last week under pressure from McMaster, and former CEO Lonnie Carter announced his retirement in August. Former SCANA CEO Kevin Marsh and COO Stephen Byrne retired at the end of 2017.