South Carolinians will face a dark and uncertain energy future if state lawmakers block Dominion Energy’s buyout of Cayce-based SCANA, the Virginia-based utility told a state Senate committee Tuesday.
But state senators promptly called Dominion’s doomsday scenario a “bluff,” some adding they don’t support the $14.6 billion deal offered “with a gun” to lawmakers’ heads.
“There’s a lot of spin going on. There’s a lot of bluffing,” said Senate Majority Leader Shane Massey, R-Edgefield, who co-chairs the special Senate committee. “This is high-stakes poker.”
Those comments came during a tense, sometimes theatrical 90-minute showdown between Dominion and a Senate committee asked to evaluate its offer to buy SCANA. The hearing was Dominion’s first public appeal to S.C. lawmakers. The utility will testify before a special S.C. House committee Wednesday.
As he did last week before state utility regulators, Dominion Chief Executive Tom Farrell pitched his utility as the white knight in South Carolina’s nuclear fiasco. Dominion is offering a $7-a-month rate cut to customers of SCANA’s electricity subsidiary, SCE&G, and about $1.3 billion in immediate refunds to those customers, who have paid $1.8 billion for SCANA’s failed nuclear expansion project over the past decade.
But some of Farrell’s points fell flat Tuesday. State senators remain unhappy Dominion plans to charge SCE&G customers another $2.8 billion over 20 years for two nuclear reactors that will not be finished.
Dominion has said it will walk away from its SCANA deal if lawmakers repeal the 2007 law that allows those charges, which currently make up about 18 percent of the average SCE&G bill, to continue. Under proposals before the Legislature, SCE&G could not continue to make the charges.
To much skepticism from lawmakers, Farrell testified blocking those charges would cripple SCANA’s finances and credit rating, raise its cost of doing business and, ultimately, cause SCE&G’s average $150-a-month power bill to soar even higher. SCANA would become the “weakest utility in the United States,” he said.
The long-term consequences also would affect economic development, Farrell said. Companies looking to establish headquarters or manufacturing plants want cheap, stable energy, Farrell said, and they don’t want to invest in a state where lawmakers are prone to change drastically the laws that govern businesses.
“This issue threatens to cast a shadow over the economic engine that you all have nurtured,” Farrell said, appealing to lawmakers in a state that prides itself on being business friendly.
And that’s if SCANA avoids bankruptcy, a real possibility, Farrell said. “In bankruptcy, everyone loses except for lawyers.
“Even the threat of bankruptcy will cause years of uncertainty for everyone involved.”
Senators were skeptical.
Massey, who has compared Dominion’s offer with a payday loan, said he has heard the bankruptcy warnings for months, calling them a bluff.
At one point, state Sen. Mike Fanning, D-Fairfield, asked members of the audience at the hearing to stand if they were on the payroll of a utility involved in South Carolina’s energy debate. After a long pause, more than half of the room rose.
“This is what the ratepayers of South Carolina are up against,” Fanning said.
The Fairfield Democrat, whose Senate district includes the nuclear construction site, said he did not appreciate Dominion’s approach to the hearing.
“Now, I feel like I’ve got a gun to my head,” Fanning heatedly said. “You tell us, ‘You’re not going to get a better offer anywhere around.’ ”
Farrell said he isn’t trying to hold a gun to anyone’s head. But while imperfect, Farrell said, the Dominion deal is the best option available.
“It’s kind of like a political election. You have to vote for somebody,” Farrell said. “You may not really like either candidate. But, when you go in the booth, there’s only two alternatives.”
Farrell urged senators not to discard a “very good” solution in favor of waiting for the perfect answer.
“Folks, we’re so far from perfect we can’t even see it with a telescope,” Massey retorted.
Some state senators left Tuesday’s hearing convinced a better deal could surface.
Lawmakers want to push Dominion to sweeten its own deal. Also, other utilities, including Florida-based NextEra Energy, are said to be mulling a counteroffer for SCANA.
Wall Street is skeptical another better offer is coming.
In trading Tuesday, SCANA’s stock closed down almost $2 a share at $42.31. That price is far below Dominion’s buyout offer of $50.35, based on the closing price Tuesday of Dominion shares.
In part, that $8-a-share gap — between SCANA’s stock price and Dominion’s offer — represents skepticism by some investors the SCANA buyout will get done.