Dominion buys out SCANA: How we got here
SCANA Corp. has agreed to a $2 billion settlement with the S.C. customers it charged high electric rates for a failed nuclear plant construction project.
And, in a new twist, the legal agreement turns over to SCE&G customers the $115 million golden parachutes that had been set aside for soon-to-be-ousted SCANA executives. It also forces the sale of a number of non-essential SCANA properties that could give SCE&G customers another $70 million or more in refunds or rate credits, according to one attorney involved.
However, the settlement — announced Saturday by Cayce-based SCANA — is not a done deal.
It hinges on a judge’s OK and a ruling from the S.C. Public Service Commission approving Virginia-based Dominion Energy’s proposed buyout of SCANA, SCE&G’s parent company.
As part of that buyout, Dominion has proposed to slash SCE&G’s nuclear-bloated electric rates by as much as $22 a month — saving SCE&G’s 730,000 electric customers more than $2 billion.
That’s how much SCE&G customers have paid in the form of higher power bills for the failed V.C. Summer Nuclear Station expansion project. It also matches what ratepayers were seeking from SCE&G in nuclear refunds, according to Pete Strom, an attorney representing SCE&G ratepayers.
“This is basically our version of the Bernie Madoff situation,” Strom said. “We have some bad actors who did some bad stuff at SCANA. As a result of that, hundreds of millions of dollars are lost. … We’ve gotten as much money as we possibly can out of this and still make it somewhat attractive for Dominion to take it over.”
The settlement seeks to resolve a legal firestorm over SCE&G customers’ bloated power bills that has raged since July 2017, when the Cayce-based utility canceled its decade-long, $9 billion effort to build two more nuclear reactors at the V.C. Summer Nuclear Station in Fairfield County.
SCE&G’s customers have paid more than $2 billion in the form of higher power bills to finance the now-abandoned project. The impact on SCE&G’s highest-in-the-region power bill was noticeable.
After nine rate hikes, about one-fifth of SCE&G customers’ power bills were paying for the project. That cost the typical residential customer about $27 a month.
As soon as SCE&G canceled the project, its customers wanted their $2 billion back. They filed lawsuits seeking refunds and accusing their utility of fraud and negligence.
The settlement announced Saturday could put an end to that legal battle.
It came with the endorsement of S.C. Attorney General Alan Wilson, a Lexington Republican who last September issued a non-binding opinion that the 2007 law that enabled the V.C. Summer nuclear project and its nine rate hikes was unconstitutional.
Wilson thanked Dominion Energy “for its willingness to provide the financial resources necessary to make this restitution. It is important to note that Dominion Energy was not involved in the creation of this situation, and we appreciate its role in finding a resolution that serves the best interests of SCE&G ratepayers.”
Wilson said he believes the $2 billion settlement is the largest of its kind in S.C. history but hinted that his office is continuing its investigation into the nuclear project’s failure.
“This milestone ends our pursuit for restitution to ratepayers, but does not end our inquiry into the individual actors that may have contributed to the project’s failure,” Wilson said. “We want to acknowledge the hard work of the private lawyers who zealously fought for the interests of ratepayers as well through various lawsuits filed on the behalf of SCE&G ratepayers.”
Strom, the former U.S. attorney for South Carolina, also said the investigation into potential criminal wrongdoing by SCANA executives likely is not over.
“At the end of the day, the real justice is going to come for those who did anything criminally wrong,” Strom said. “I would be surprised if there were not indictments.”
As part of the settlement, SCANA agreed to turn over to its electric customers a $115 million trust it had set aside for executives if they lose their jobs during the planned Dominion takeover. The money once earmarked for executives now could go to customers in the form of credits or refunds.
That would include former SCE&G customers who helped pay for the V.C. Summer project but since have moved away, Strom said.
Those executives likely would still receive golden parachutes if they lose their jobs during the Dominion merger. But Dominion now would be on the hook to pay those severance packages.
Current and former SCE&G customers also would benefit from the sale of non-essential SCANA properties, including the Ramsey Grove Plantation in Georgetown, where SCANA executives duck hunted; the original SCE&G headquarters on Meeting Street in Charleston; and several properties near SCANA’s Cayce headquarters.
“We wanted to take away the golden parachutes and the toys for anybody still left there,” Strom said.
It was unclear Saturday how much the ratepayer attorneys would be paid as part of the settlement.
The settlement included no admission of guilt or blame from SCANA. The company consistently has deflected blame for the project’s failure to lead contractor Westinghouse for declaring bankruptcy in March 2017 and state-owned minority partner Santee Cooper for unilaterally pulling out of the construction effort on July 31, 2017.
“SCANA and SCE&G deny the allegations made in the lawsuit, but have agreed to resolve this matter,” the company said in a news release.
SCANA’s top attorney, senior vice president Jim Stuckey, said in a statement, “We are pleased that we were able to achieve a mutually acceptable resolution of this matter so that we can keep our focus on moving forward with the merger with Dominion Energy.”
John Monk contributed to this story.