If the S.C. Legislature guts a controversial law that let SCE&G charge its customers $1.8 billion for a bungled nuclear project, it could kill a deal by Dominion Energy to buy the S.C. utility’s parent, SCANA.
Dominion chief executive officer Tom Farrell said Thursday his utility’s agreement to buy SCANA hinges on keeping parts of the 2007 Base Load Review Act in place.
A key part of that law allows SCE&G to continue charging its customers for the V.C. Summer nuclear expansion project in Fairfield County even though it won’t be built.
But some S.C. legislators, who return to Columbia Tuesday for a new session, have filed legislation to block SCE&G from billing its customers any more for the failed project.
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“Depending on the language, it (that legislation) could provide insurmountable obstacles,’’ Farrell said in an interview Thursday with The State.
Dominion has proposed a $1,000 cash refund to the average SCE&G residential customer for the nuclear debacle as part of its offer to buy SCANA. That $14.6 billion deal, in the works since last month, became public Wednesday.
Dominion, which has extensive natural gas holdings in South Carolina, says its buyout plan would provide immediate relief to S.C. ratepayers if approved by state and federal regulators, and shareholders of the two companies.
SCE&G’s S.C. electricity customers now are paying about 18 percent of their power bill for the nuclear project, about $27 a month for the average residential ratepayer.
‘Perfect should not eliminate very good’
Dominion’s Farrell said his company would not oppose all changes to the controversial law, which made it easier for utilities to charge their customers for the cost of nuclear power plants before they produce power.
But taking away his company’s ability to recoup part of the cost of the failed project would be financially difficult, Farrell said. Dominion has its own stockholders to consider, he said.
“The language of the merger agreement (has) conditions,’’ Farrell said. “The substance of it is, as I understand it, there can’t be any significant change to the regulatory treatment that has economic impact on the transaction. In similar words, substantive change to the (Base Load) Review Act that has an impact on the transaction.’’
SCANA has said if it stopped charging its customers the nuclear assessments on their power bills it would risk bankruptcy. Instead, the Cayce-based utility proposed a $5-a-month reduction in power bills. Legislators quickly called that inadequate. Dominion is offering $1,000 refunds and pledging to cut SCE&G’s electric rates by $7 a month.
In addition to Dominion’s residential refunds, the amount to be rebated to SCE&G’s industrial customers easily could be in the millions of dollars, SCANA chief executive Jimmy Addison said Thursday.
Farrell said the buyout deal won’t resolve all outstanding issues concerning the V.C. Summer construction failure, but it’s a good plan with an eye toward helping customers. The proposal would cut rates by $7 a month and slowly decrease customers’ nuclear charges over 20 years, as opposed to the 50 to 60 years previously proposed by SCANA.
“It may not be perfect,” Farrell said. “But we are hopeful that we will be able to demonstrate to people that perfect should not eliminate very good.”
‘Take-it-or-leave-it deal falls far short’
State legislators are not ready to endorse the SCANA-Dominion buyout.
Some lawmakers say customers should get more money of the money that they have paid for the failed nuclear project than Dominion has been offered. Bills addressing that issue are expected to dominate much of the 2018 legislative session.
“At this point, I’m not comfortable asking ratepayers to continue to pay for the project,’’ said state Rep. Peter McCoy, a Charleston Republican who chairs a committee studying the V.C. Summer project failure. “Everybody in the state was hoodwinked by the utilities.’’
Public interest groups, which are seeking major refunds for SCE&G customers, panned the Dominion proposal as insufficient.
“The take-it-or-leave-it deal falls far short of protecting ratepayers from absorbing the costs of the nuclear fiasco, while replacing the unneeded nuclear plant with unnecessary natural gas capacity instead of cheaper and cleaner energy alternatives,’’ the Friends of the Earth environmental group said in a statement.