Angie McClam remembers with pride the day she bought her first share of SCE&G stock, paying about $10 for it.
There wasn’t a more stable investment in the late 1960s than the local power company, McClam figured, and for decades, her belief held true.
But billions of dollars’ worth of problems — tied to a failed SCE&G nuclear reactor construction project — surfaced last summer, leaving McClam, an 84-year-old grandmother, to watch her quarterly stock dividend drop by more than $6,000.
Now, McClam must decide whether she will vote to accept an offer by Virginia’s Dominion Energy to buy SCE&G’s parent company, SCANA, in a move that could recoup her investment — but lead to the end of the Cayce-headquartered utility as a locally owned corporation.
Tuesday, one year to the day after the V.C. Summer debacle exploded, SCANA will tabulate its shareholders’ votes on Dominion’s buyout offer. Chances are good that those shareholders will take Dominion’s offer, agreeing to exchange SCANA’s battered stock for more valuable shares in Dominion, a much larger energy corporation.
If that happens, Dominion will have cleared a major hurdle in its quest to buy SCANA, once a pillar of South Carolina’s business community and the chief power supplier to the state’s two largest cities, Columbia and Charleston.
Regardless of how shareholders vote, McClam says the outcome of Tuesday’s vote will be sad.
If SCANA’s shareholders vote to accept the Dominion deal, South Carolina will lose another of its onetime corporate anchors, a utility that powered much of the state, employed thousands, contributed heavily to S.C. charities and causes, and managed Lake Murray, one of the state’s most popular recreational lakes.
“There was a certain pride in SCE&G, and it goes back a long way,’’ the Irmo widow said. “They lit the gas lamps in Charleston and in Columbia. It is part of our heritage.
“I’ve never lost a child, but this is as near as what I would think it is like. I’m in tears now.’’
SCANA is in trouble — its sale is a bailout — because of a nuclear construction fiasco that has drained its coffers and threatens to pull more money from the utility. The utility, with more than 700,000 electricity customers, began to falter in early 2017 amid rumblings that its effort to build two additional nuclear reactors at the V.C. Summer Nuclear Station in Fairfield County was in trouble.
In March 2017, the chief contractor for the project, Westinghouse, declared bankruptcy. Then, on July 31, 2017, SCANA and its junior partner in the reactors, the state-owned Santee Cooper utility, quit the project, saying it had become too expensive and difficult to complete as a result of Westinghouse’s bankruptcy.
Since that time, legislators have held hearings and passed laws intended to give SCE&G’s customers back some of the $2 billion they already have paid for the failed project. Meanwhile, angry customers and shareholders have sued SCANA, and federal authorities have launched criminal investigations into the utility’s actions.
Over the past two years, SCANA’s stock price has fallen by about $30 a share. Dominion now is offering to buy SCANA by swapping its devalued shares for more valuable shares in the Virginia-headquartered utility. For each share of stock they give up, SCANA shareholders would get slightly more than two-thirds of a share of Dominion stock.
Financial analysts said they would be surprised if SCANA’s shareholders do not approve the merger. About 70 percent of SCANA’s stock is owned by institutional investors, whose first priority is making money, not retired widows like McClam. Among SCANA’s major stockholders are the Vanguard Group mutual fund, Blackrock and Newport Trust.
“I definitely think shareholders will jump at the opportunity to go with the Dominion deal,’’ analyst Travis Miller said. “Not only is there an upside to the (Dominion) stock price, but there is also the relief from having to deal with this nuclear project hangover by themselves.”
Dominion’s stock was selling for roughly $71 a share Friday, compared to about $40 for SCANA. Offering SCANA stockholders more than two-thirds of a share of Dominion stock for each share of SCANA — as the buyout offer calls for — would give them shares worth about $7 more apiece, said Miller, who is with Morningstar in Chicago.
But Miller and Paul Patterson, an analyst with GlenRock Associates, said the real story is what happens next.
“This is not much of a cliffhanger,’’ Patterson said of Tuesday’s merger vote. “We’re now focused on what the state is going to do, more than what the shareholder is going to do.’’
Even if SCANA shareholders take the Dominion offer, looming regulatory issues could kill the deal. The merger still must be approved by utility commissions in North and South Carolina, as well as the U.S. Nuclear Regulatory Commission.
One of the biggest potential obstacles remaining is the S.C. Public Service Commission. That commission must OK the merger and also decide whether SCANA subsidiary SCE&G should pay back billions of dollars that it charged its electric customers for the nuclear project.
If the PSC requires refunds that Dominion is not comfortable with, the Virginia utility says it will walk away from the deal.
Also, while it is expected SCANA’s stockholders will vote for the Dominion offer, it is possible not enough shareholders will vote in favor of it. Approving the merger will require the approval of two-thirds of SCANA’s shares outstanding, far more than a simple majority of shares voted.
Sad stockholders, angry senator
SCANA shareholders have been voting their shares for weeks. They had the option of mailing in their ballots, voting online or calling a secure phone number.
But they can change their votes if they go to Tuesday’s shareholder meeting.
McClam already has voted against the Dominion buyout.
But she said she might change her mind.
The question is whether she should vote in favor of her pocketbook — for the buyout — or stick with the hometown company, SCANA. The Dominion offer would make a big difference in getting back some of the $7,800 that McClam said she was receiving each quarter until SCANA cut its dividends this summer. Her latest check was for a little more than $1,600.
“I almost lost my false teeth — and I don’t have false teeth,’’ she said of her reaction when she saw the smaller check.
Like McClam, former Columbia resident Miriam Mitchell said she doesn’t like the idea of Dominion taking over SCANA. A 75-year-old retiree, Mitchell worked for SCE&G for nearly 20 years and bought stock in the utility.
“It was a good company, a favorite in the community,’’ Mitchell said. “You could take pride in working there.’’
Today, Mitchell says, she is bothered by how SCANA has changed.
Mitchell, who now lives in Beaufort County, voted against the merger, mostly because, as part of the deal, SCE&G’s top executives stand to make millions of dollars in severance pay.
“They do not deserve one red cent,’’ she said.
Although some people are sentimental about losing SCE&G as a locally owned company, others say customers likely won’t notice any difference if the merger goes through.
Dominion spokesman Chet Wade said the utility has committed to SCE&G becoming a subsidiary of Dominion and keeping its S.C. headquarters in Cayce.
“Local SCANA shareholders will now become shareholders of Dominion Energy, continuing to give them a voice in the company,’’ Wade said.
Others say the Dominion offer boils down to a business deal.
Victoria Glover, a 44-year-old Columbia resident who has worked for SCANA for 17 years, said she is convinced the Dominion offer will be good for shareholders and for South Carolina. She said she voted for the Dominion merger.
“I’ve talked to people in companies bought out by Dominion, and they said nothing really changed,’’ Glover said. “Those companies kept their own identities. I’m hopeful the same thing will happen here.’’
SCANA critics say its shareholders have made out well during the past year — at its customers’ expense. Only recently did SCANA cut dividends for stockholders, even as it continued to charge its customers $27 a month, on average, for a nuclear project that never will be finished.
Many say it is hard to feel sorry for SCANA’s stockholders.
But they also say losing SCANA as a locally headquartered company is not the route they would have preferred.
State Sen. Nikki Setzler, who grew up on SCE&G power as a West Columbia resident, said South Carolina is on the verge of losing its locally owned utility because SCANA’s executives became too arrogant for the company’s good. The Lexington County Democrat said he has noticed a colder, more corporate approach by SCANA over the past 10 years.
“As somebody who has lived here all my life, I’d prefer that we have a local, in-state company run by local people,’’ Setzler said “It’s tragic that the management has put this company in such a condition that that is not probably a viable alternative.’’
Setzler said he remembers the high regard local residents had for SCE&G. In addition to building and managing power facilities, the utility gave heavily to S.C. charities and causes, and employed many of Setzler’s friends and neighbors. In the past, Setzler said, he and some top utility executives have attended the same church.
But, he added, that is history. Now, people are more interested in reasonable power bills and stable management than holding on to a locally owned utility with problems.
“What they have done to the ratepayers in recent years is horrendous,” Setzler said. “But so is what they have done to the many people who worked for that company and given their life to creating a positive reputation and involvement in this community.’