A year after SCANA walked away from a decadelong, $9 billion effort to build two nuclear reactors, its stockholders approved the sale of the S.C. utility to Dominion Energy of Virginia.
Shareholders controlling 72 percent of SCANA’s stock voted for the sale Tuesday, more than the two-thirds required.
Jimmy Addison, SCANA’s chief executive officer, announced the vote at the end of a special stockholders’ meeting, attended by about 100, in which some stockholders showered the utility with criticisms of the merger and the failed V.C. Summer nuclear project.
Addison said he was glad shareholders voted in favor of the Dominion merger but noted the deal isn’t final until it receives pending regulatory approvals later this year.
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Shareholders — most of them large institutional investors, including pension funds, mutual funds and insurers — were expected to approve the sale. But shareholders did not give their final approval to the deal until some local, long-time investors had criticized the utility, which has lost 40 percent of its stock value over the last year. Some asked why shareholders should suffer for the mistakes of utility executives.
“Why in the world did you all approve to build two reactors at the same time?’’ asked stockholder Johnny Shealy, a Ballentine resident who worked 33 years at SCE&G before retiring. “We couldn’t do it, boys. I came from the ground up. Y’all fellows didn’t. I tell you I’m pretty doggoned mad. As for the board of directors, y’all can take a hike.’’
Some shareholders were upset SCANA executives stand to get up to $110 million in severance pay if the Dominion merger goes through. Shareholders voted Tuesday against paying those severance packages. But that vote was nonbinding, and the compensation still could be paid as part of the contract to sell to Dominion.
Others said losing SCANA in the merger will be bad for the Columbia area. SCE&G is a major local business and employer that has been in the area for generations.
“Mergers never work out,’’ Irmo’s Herbie Meetze said. “The person being merged in is a red-headed stepchild.’’
LaBruce Alexander of Columbia, a longtime SCANA shareholder, said she is worried that Dominion will extend a natural gas pipeline — unneeded, she said — into South Carolina. But she said many of those voting don’t know much about Dominion.
“Most people who have voted in favor … do not know what is involved here,’’ said Alexander.
‘Best solution for everyone’
The vote Tuesday is a major milestone in Dominion’s quest to buy SCANA, the parent company of SCE&G, a utility with roots dating to the 1840s in Columbia and Charleston. SCANA employs 6,000 and, through SCE&G, serves 700,000-plus S.C. customers with electricity.
The next step is a big one: state utility regulators in both Carolinas must OK the deal. The S.C. Public Service Commission also will decide whether SCANA must repay its customers billions of dollars that they already have paid for the bungled nuclear project. Dominion could walk away from the buyout deal if the PSC requires more in refunds than the Virginia utility thinks reasonable.
But the proposed buyout could not get to that point without SCANA’s stockholders agreeing to accept Dominion’s offer. SCANA, which recommended taking the Dominion offer, issued a statement after the meeting saying its shareholders made the right decision.
“We are pleased with the approval from our shareholders,” said Maybank Hagood, SCANA’s board chairman. “We believe the merger with Dominion Energy offers the most comprehensive solution for our customers and aligns SCANA with a company that mirrors our commitment to delivering safe and reliable energy.”
Dominion spokesman Chet Wade said, “We’re pleased with the outcome, and we’re going to work toward bringing the best solution for everyone. ‘’
V.C. Summer bailout
The buyout boiled down to a financial bailout for many investors. Some 70 percent of SCANA’s stock is owned by institutional investors whose sole goal is making as much money as possible.
For every share a SCANA stockholder gives up, Dominion is offering two-thirds of a share of its stock. Because Dominion’s stock is selling at about $30 a share more than SCANA shares, the deal should net SCANA stockholders almost $8 a share more than the S.C. utility’s current stock price.
The shareholders’ decision comes exactly a year after one of the biggest construction failures in S.C. history.
On July 31, 2017, SCANA and state-owned partner Santee Cooper abandoned their 10-year effort to build two nuclear reactors in Fairfield County to complement the V.C. Summer Nuclear Station’s existing nuclear reactor.
The two S.C. utilities had spent about $9 billion on the project when they abandoned it, citing the bankruptcy of the project’s chief contractor, Westinghouse, as a major reason for their decision. Some forecasts had the project costing more than $20 billion to complete.
SCE&G ratepayers already have been charged more than $2 billion to pay for the project. They continue to pay about $27 a month for the reactors, even though the work won’t be finished. The utility is fighting a new S.C. law that requires it to roll back much of that charge, saying it needs the money.
‘Make the most money’
If successful in its effort to take over SCANA, Dominion, which employs 16,000, would expand its foothold in the Columbia and Charleston energy markets. The merged company would deliver energy to 6.5 million customers and have a combined electrical generating capacity of 31,400 megawatts.
Dominion acquired SCANA’s natural gas pipeline operation in 2014, opened a S.C. headquarters office in Columbia and built a natural gas pipeline through lower Richland County. The SCANA deal would position Dominion to extend into South Carolina a large, controversial natural gas pipeline that it plans from West Virginia to southeastern North Carolina.
Dominion, a major player in the national energy business, is substantially larger than SCANA.
Dominion’s assets extend from its home base in Virginia to New England and the western United States. In 2016, the utility expanded into the Rocky Mountain region, acquiring Questar. That deal made Dominion one of the nation’s largest electric and natural gas utilities — with about 15,000 miles of natural gas pipelines, three nuclear power plants and 18 natural gas plants.
SCANA has been a pillar in Columbia and Charleston for generations. The utility has spent millions on charity and employs many local residents. It operates Lake Murray, a beach at the lake and permits docks for homeowners who live along the sparkling reservoir.
Despite the buyout’s expected approval Tuesday, some longtime SCANA stockholders held out hope the deal would not go through. Some said losing a S.C.-headquartered company to an out-of-state utility would mean less local control of SCANA, which would become a subsidiary of Dominion.
But the vote was no surprise to Freeda Cathcart, a Roanoke, Va., resident who owns SCANA stock. Cathcart said Dominion is a powerful corporation that has been hesitant to fully support renewable energy as a way to supply power. But Dominion’s offer was too good for many to pass up, she said.
“The majority of holders are investment firms, and they are going to go where they can make the most money and not (do) what’s in the best interests of the people of South Carolina,’’ she said.