Customers tell us that reliability is the most important thing when it comes to energy. They need to know it will be there 24/7, no questions asked. They speak in terms of certainty and trust. Customers do not want anyone gambling with an essential service.
That is the heart of Dominion Energy’s proposal to combine with S.C. Electric & Gas and its corporate parent, SCANA. We can provide certainty about the energy future of South Carolina and will work to re-establish trust. All while providing customers with $1.3 billion in cash payments, covering another $2.3 billion in new nuclear costs and lowering electric rates.
Certainty is what separates our proposal from every other option being discussed. Our proposal is real, not rumored. It is the only one certain to put money in the hands of customers and bring lower rates, not higher. It works to address concerns of all parties. And it makes it possible to avoid having South Carolina’s energy policy decided by federal courts after years of expensive litigation and damage to the state’s reputation.
Every day it becomes more apparent that retroactively repealing the Base Load Review Act — no matter how emotionally appealing — would be a cure far worse than the disease. It won’t resolve the problems with the V.C. Summer nuclear construction project and would only create more problems.
It was just this concern that led the S.C. Chamber of Commerce and the nonpartisan business and industry organization SCBIPEC to speak out against a retroactive roll back. The chamber said such action risks increasing electric rates in the future. That would cause a “threat to jobs and continued growth” and tag South Carolina as “a risky place in which to invest.”
Some scoffed at the idea of an SCE&G bankruptcy. However, a study for the state Public Service Commission confirmed the risk is very real. It is hard to casually dismiss a one-third chance of failure of the provider of an essential service. And a column in this newspaper explained that he study did not consider what would happen if customer refunds were ordered or even if the utility was prohibited from recouping billions of dollars in investments in the new nuclear units.
The repeal would drive SCE&G to junk status in the credit markets, and its costs of raising that money would skyrocket.
Bankruptcy of the state’s largest utility would have deep and lasting repercussions. The bankruptcy of a California utility in the early 2000s — caused by misguided state legislative action — cost the state and company an estimated $45 billion. When it was over, customers had to pay substantially higher rates.
But bankruptcy is beside the point. A retroactive rollback of the BLRA would push rates higher no matter what. At current levels, SCE&G needs to invest more than $5 billion over the next 10 years to maintain its system and serve new customers. The repeal would drive SCE&G to “junk” status in the credit markets, and its costs of raising that money would skyrocket. Those higher costs would quickly work their way into the bills of both electric and natural gas customers.
And there is the constitutional question: Can government make something wrong retroactively? Changing the law now would be like driving at the posted speed on Monday, having the speed limit lowered on Wednesday and getting a ticket on Friday for speeding four days earlier.
The result would be millions of dollars in legal expenses for taxpayers, years of uncertainty and SCE&G potentially having the right to roll in all the V.C. Summer costs — including those not in bills today.
Some legislators have warned their colleagues that retroactively reversing the BLRA is sure to be overturned in the courts. The result would be millions of dollars in legal expenses for taxpayers, years of uncertainty and SCE&G potentially having the right to roll in all the V.C. Summer costs — including those not in bills today.
Efforts to engineer other solutions carry their own significant risks. Dominion and SCANA have a valid and binding agreement. If there are other suitors for SCANA, they can come forward without the need for false fronts and backroom negotiations. And, trying to restructure South Carolina’s energy markets on the fly to squeeze SCANA into some other arrangement sounds remarkably like the hurried process that resulted in the BLRA.
Our proposal is not perfect — just much better than any realistic alternative.
Our comprehensive proposal addresses the needs of customers, communities, employees and shareholders. Along with a number of state and federal approvals, any merger must be approved by two-thirds of SCANA’s shareholders.
Dominion Energy’s proposal is about far more than the $12.2 billion in total customer benefits. It is about restoring certainty and trust.
We have said all along that our proposal is not perfect — just much better than any realistic alternative. We offer a strong energy partner able to lower and hold down rates, invest in renewable energy, promote grid security and enhance service reliability. We offer a brighter future together.
Mr. Farrell is chairman, president and chief executive officer of Dominion Energy; contact him at TomFarrell@dominionenergy.com.