Dominion Energy chief executive Tom Farrell testified Thursday that his company’s offer to buy out SCANA and lower its customers’ electric rates is the best solution for South Carolina’s $9 billion nuclear fiasco.
But Farrell also said Richmond-based Dominion would withdraw that offer and leave town if the S.C. Public Service Commission sides with the state’s utility watchdog and orders a bigger cut in electric rates than Dominion has suggested.
“It is vital to step beyond the current (nuclear) frustrations … and find a reasonable solution that extinguishes risk and uncertainty,” Farrell said. “We want to put the story to bed.”
Farrell testified for the first time in Day 11 of the PSC’s month-long hearing into the failure of the V.C. Summer Nuclear Station expansion project in Fairfield County and the future power bills of SCANA’s electric subsidiary, SCE&G.
SCE&G raised its power bills nine times — by $27 a month for the average residential customer — to pay for the construction of two new nuclear reactors before pulling the plug on that project in July 2017, after years of cost overruns and construction delays.
In January, Dominion announced it had reached a deal to buy SCANA, cut SCE&G’s electric bills by about $10 a month and pay $1,000 nuclear-related refunds to SCE&G’s average residential customers.
The company recently offered an alternative to that proposal. It would drop the $1,000 partial refund in favor of a deeper, $20-a-month rate cut.
But state regulators and other groups involved in the PSC case want a bigger rate cut.
The S.C. Office of Regulatory Staff has argued SCE&G fraudulently misled the PSC in order to obtain rate hikes for the failing nuclear project. They have urged the PSC to “securitize” SCE&G’s billions of dollars in nuclear debt, creating a repayment plan that would lower customers’ electric rates and also the utility’s profits.
That won’t work, Dominion executives testified Thursday, noting a securitization plan would require a special law the S.C. General Assembly has not passed.
Dominion chief financial officer Jim Chapman said securitization “would, unfortunately, defeat the merger” and send Dominion packing. He added Dominion’s proposed benefits are better for SCE&G customers than Regulatory Staff’s proposal.
Farrell has said a deeper rate cut, like the one Regulatory Staff is requesting, could be defeated in a lawsuit, guaranteeing more months of uncertainty over SCE&G’s rates.
Under Regulatory Staff’s proposal, the typical SCE&G residential customer would pay another $1,280 for the project over the next 20 years. Dominion’s most recent offer would cost that customer $1,700 over 20 years.
He also noted no other utility “has made any proposal” to bail out SCANA “for you to consider.”
The Dominion CEO did not mention that his company’s deal with SCANA created high barriers — including a $240 million breakup fee — meant to ward off competing offers.
PSC commissioners Thursday also were curious about $110 million that SCANA executives set aside in a trust for themselves in case they lose their jobs after a Dominion takeover.
Farrell said he did not know that SCANA had set up the trust. He added the fund to pay so-called “golden parachutes” to fired executives was “unnecessary.”
Chapman testified SCE&G customers will not be made to pay that $110 million if Dominion buys the Cayce-based utility.
Public Service Commissioner Justin Williams wasn’t satisfied with that promise. Calling himself a country boy, Williams said, “I don’t know that people get credit for driving a car into a ditch.”