Dominion proposes alternate SCANA deal

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Dominion Energy has amended its proposal to acquire Cayce-based SCANA Corp., offering a greater long-term reduction in rates that would take a $1,000 average upfront refund off the table.

In new testimony filed this morning with the S.C. Public Service Commission, Dominion CEO Tom Farrell said a merger with his Richmond, Va.-headquartered company could reduce the bills of S.C. Electric & Gas ratepayers by 14%. In its original proposal in January, Dominion promised a permanent 7% rate reduction in a deal that would include the upfront refund.

“Several interested parties to this proceeding have, in their testimony and otherwise, suggested the development of a plan which focuses more directly on long-term permanent bill relief as opposed to up-front customer refunds,” Farrell said in his PSC testimony (.pdf). “In response to those suggestions, the alternative plan was developed by the company.”

Farrell’s testimony says the reduction would bring the average SCE&G customer’s bill to $126.96 per month. V.C. Summer-related charges would drop to $6 per month and eventually disappear under the new proposal, Farrell said.

“These are bill levels which SCE&G’s customers have not seen since 2009,” Farrell said in the PSC filing.   

SCE&G ratepayers have ponied up $2 billion by way of an 18% rate increase to pay for the abandoned twin nuclear reactors at the V.C. Summer Nuclear Power Station in Fairfield County. SCE&G and project co-owner Santee Cooper poured more than $9 billion into the decade-long construction of the reactors before abandoning the project in July 2017 after a series of rising costs and mounting delays and in the face of contractor Westinghouse’s bankruptcy three months earlier.

Allegations of project mismanagement have sparked public outcry and legal action, and the ramifications from a class action lawsuit filed by SCE&G ratepayers seeking to halt V.C. Summer-related payments pose a potential threat to the Dominion proposal. A circuit court judge assigned to that case has asked attorneys for both sides to draft orders containing language that says the Base Load Review Act is unconstitutional.

The BLRA, a state law passed in 2007, is the mechanism by which SCANA asked state regulators to approve the nine rate increases it received to fund the nuclear reactors. Dominion has said an outright repeal of the BLRA would torpedo the deal, as the Virginia company has said it must be allowed to continue to recoup V.C. Summer-related costs from SCE&G ratepayers.

In his PSC testimony, Farrell said an order from Judge John Hayes that scraps the BLRA would change the grounds of the potential merger, already in doubt because of steps taken by the S.C. Legislature to repeal the BLRA and reduce SCE&G rates.

“If Judge Hayes were to issue such an order, we would be unable to close the merger,” Farrell said.

Farrell said Dominion has been discussing the alternative plan with interested parties and presented it to the PSC, slated to take up the proposed acquisition next month, as the time for action draws nearer.

Farrell said Dominion continues to support its first proposal as a preferred outcome.

The Dominion deal has received several key approvals but awaits the go-ahead from the public service commissions of South Carolina and North Carolina, among other conditions. The S.C. commission is barred from ruling on the proposal until next month as part of legislative action taken in June that also temporarily reduced SCE&G customers’ bills by 15%.

Dominion has kept tabs on that action, as well as the flurry of legal responses from SCE&G, which twice had requests to block the rate reduction denied.

“Solving for the greatest reasonable benefit for the customer associated with this business combination while maintaining the economics of the transaction for our investors has been, and remains, our charge,” Farrell said in the PSC filing.