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Dominion CEO back before Senate

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Tom Farrell, CEO of Dominion Energy, faced questions from S.C. senators again on Wednesday during a session of the V.C. Summer Nuclear Project Review committee.

The hearing focused on the proposed deal between Richmond, Va.-based Dominion and Cayce-based SCANA. The $14.6 billion merger is pending the approval of several state public service commissions, including South Carolina’s. While SCANA, parent company of S.C. Electric & Gas, has asked the S.C. Public Service Commission to expedite a decision, a Senate panel has approved a proposal that could delay any ruling until 2019.

Last week, a joint resolution to prevent the PSC from acting until 90 days after this year’s legislative session ends in November won Senate approval. The proposal was introduced by Senate President Pro Tempore Hugh Leatherman, R-Florence; Majority Leader Shane Massey, R-Edgefield; and Minority Leader Nikki Setzler, D-Lexington, who say legislators need more time to evaluate their options.

“We want you to take your time, to get to know the deal, but we need to move with all deliberate speed,” said Farrell. “We can’t continue to have this uncertainty.”

Dominion originally asked for an April 17 PSC hearing.

“If we move on this too quickly, and end it, we could be stuck with it,” Massey said. “I understand ending it brings certainty, but we don’t know what all is in the deal.”

Massey said the Office of Regulatory Staff would not be prepared to ask necessary questions until almost the end of the year, but Farrell said that timeframe would be unworkable.

Another complication is a bill passed by the S.C. House bill that blocks SCE&G from continuing to charge customers for the failed nuclear reactor project under the Base Load Review Act and repeals rate increases requested by SCANA and approved by the PSC during the decade-long construction of the reactors. The Senate has yet to vote on the bill.

Dominion has said that removing the ability to collect costs of the failed project from ratepayers would kill the proposed merger. “It just wouldn’t be economical,” Farrell said Wednesday.

On Thursday, the House passed a bill that would reform the PSC. Commissioners’ terms would be shortened from six to four years, with election terms staggered for current commissioners. Ethical standards would also be strengthened in an attempt to limit outside utility influence, and the PSC would have the ability to inspect utility construction sites.

“The V.C. Summer nuclear fallout has exposed a significant lapse of oversight by the Public Service Commission in its approval of nine rate hikes for SCE&G customers,” Speaker Jay Lucas said in a statement. “The passage of today’s bill prevents these mistakes from occurring again by increasing accountability for commissioners through shorter and staggered terms of service. Additionally, strengthening ethical requirements and prohibiting outside influence from regulated utilities will ensure the PSC refocuses its efforts on the intended purpose of promoting fairness for South Carolina ratepayers.”

Lucas called on the Senate to quickly consider the four bills passed by the House in its ratepayer protection package.

During Wednesday’s questioning of Farrell, Sen. Mike Fanning, D-Fairfield, asked what Dominion plans to do with almost $1 billion in equipment used in the reactors’ construction.

“With a merger, we would own 55% of that equipment and would find something to do with it,” Farrell said. Farrell said there was no detailed plan, but profits from anything salvaged and sold would go back to the ratepayers.

Massey also took aim at Dominion-sponsored advertising in state media, describing some television ads as a scare tactic that emphasize the possibility of SCANA bankruptcy if the deal is not completed.

Massey said the statewide ads are misleading to people who do not purchase electricity from SCE&G and would not receive a refund – estimated at around $1,000 for the average SCE&G customer – if the merger took place.

Farrell said that while he was ultimately responsible for the advertising, he had not seen it and would review it.

SCE&G owned 55% and state-owned utility Santee Cooper 45% of the twin 1,117-megawatt reactors at the V.C. Summer nuclear station in Fairfield County. After numerous delays and rate increases, contractor Westinghouse filed for bankruptcy last April, and the owners abandoned the project in July, leaving ratepayers on the hook for the combined $9 billion poured into the reactors.

SCE&G collects $37 million a month in V.C. Summer-related costs.

Also Wednesday, SCANA filed a SCE&G quarterly report with the PSC on the reactors’ construction for the period ending Dec. 31, 2017. The report states the abandonment costs incurred since Sept. 30, 2017 were expensed, as were severance costs for personnel.

“In light of the decision which SCE&G made on July 31, 2017, to abandon the construction of Units 2 and 3 at the V.C. Summer Nuclear Station in Jenkinsville, S.C., the Company continues only with the work that is necessary to safely demobilize the project, stabilize the site and close out certain environmental and other permits,” the report said. “That work is continuing but is not being capitalized as a cost of the project under the BLRA.”

SCE&G has abandoned almost all the equipment at the site and proposed that Santee Cooper determine what will be done with it.

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February 16, 2018

No deal with Dominion should be excepted that does not include full elimination of the nuclear rate increases and rebate of the nuclear rate increase amounts already paid. The consumer who had no choice in paying for this are the ones that should be protected, vs. the SCE&G stock holders and management that have already had gains due to this mismanagement.