Pass a law that blocks SCE&G from continuing to charge its customers for two abandoned nuclear reactors, and I’ll sign it, S.C. Gov. Henry McMaster told state lawmakers Tuesday.
The Richland Republican, up for election in November, wrote a letter to the General Assembly asking lawmakers for a proposal “that ensures SCANA ratepayers will not pay a single additional dollar towards the failed V.C. Summer reactors.”
He also threatened to veto any bill that “continues to place the financial burden of this corporate failure on South Carolina ratepayers.”
The proposal McMaster wants, which the S.C. House and Senate already are considering, effectively would kill Virginia-based Dominion Energy’s deal to buy SCANA and refund its electric customers about $1,000 per household.
SCANA’s stock price fell sharply after McMaster’s letter became public, falling by more than $2 a share to close at $41.16, well below Dominion’s buyout offer of almost $51 a share. That gap signals that Wall Street investors increasingly are skeptical that Dominion will buy SCANA.
McMaster’s letter cites a state agency’s report – released Friday – that found the Cayce-based utility probably would not go bankrupt if lawmakers slashed its rates.
SCE&G’s parent company, SCANA, said Monday that report is seriously flawed. The utility contends its financial solvency depends on continuing to charge its 700,000 electric customers for the Summer construction project, which SCE&G and state-owned Santee Cooper quit last July after spending $9 billion.
For the average customer, SCE&G’s rates are about $27 a month higher because of nine rate hikes the utility was granted over the past decade to help bankroll the Fairfield County construction effort.
S.C. lawmakers have said they want to slice that $27 nuclear surcharge from SCE&G’s monthly bills, reasoning that customers should not pay for a power plant that likely never will produce a kilowatt of electricity.
McMaster’s letter acknowledged the law he wants would kill Dominion’s deal to buy SCANA and partially bail out its electric customers, who have paid $1.8 billion so far in higher rates for the Summer project.
Dominion has said it will walk away if it can’t charge SCE&G’s customers another $2.8 billion for the scuttled project over the next 20 years. That money is necessary to make the acquisition of debt-laden SCANA palatable for shareholders, Dominion officials have said.
“It would be irresponsible for the General Assembly to allow SCANA – or any prospective purchaser – to continue collecting money from ratepayers for this project,” McMaster wrote. “The free market and principles of corporate responsibility demand that the consequences of SCANA’s errors land where their dividends and profits have landed: with its corporate shareholders and executives.”
McMaster wrote he would sign any bill that replaces the 2007 Base Load Review Act, the law that allowed SCE&G to collect the nuclear-related charges in the first place.
Dominion spokesman Chet Wade said the company would continue to discuss its proposal with McMaster and other state leaders.
“A retroactive repeal of the Base Load Review Act would eliminate refunds to customers, and we believe will result in higher rates than under our proposal even if the repeal is upheld in the courts,” Wade said. “We will continue do our best to help people understand the benefits of what we have presented. We have said from the beginning that our proposal may not be perfect but it provides a much brighter future with much greater certainty.”