Dominion Energy appears increasingly likely to finalize its proposed buyout of SCANA Corp., aided by a handful of major S.C. power players who recently have jumped on the Virginia-based company’s bandwagon.
That deal could have enormous implications for SCE&G’s 730,000 electric customers and many South Carolinians who own shares in SCE&G’s parent, SCANA, once the darling of the state’s business community.
Just in the past week, the powerful speaker of the S.C. House and state attorney general have endorsed Dominion’s buyout proposal, which would reduce — by up to $22 a month — the amount that SCE&G ratepayers must pay for its failed nuclear construction project.
And attorneys for SCE&G ratepayers announced Saturday they have agreed to settle their lawsuits against the Cayce-based utility in return for those rate cuts and $115 million in customer refunds if the Dominion buyout is approved by state utility regulators, removing another major obstacle to the deal.
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The recent alignment behind Dominion puts more pressure on those regulators — the seven-member S.C. Public Service Commission, appointed by the General Assembly — to OK the deal in a ruling scheduled for next month.
A settlement to the ratepayers’ lawsuit could pre-empt an expected ruling from Circuit Court Judge John Hayes that would strike down as unconstitutional the 2007 law that enabled SCE&G’s $9 billion V.C. Summer Nuclear Station expansion project and nine rate hikes to pay for it.
Now, Hayes never may issue that ruling, which could have sunk the Dominion deal. However, the settlement agreement is subject to his approval.
Wall Street has taken notice of the shifting winds. SCANA’s stock price climbed almost 6 percent Monday, up to $46.63 a share.
The gap between SCANA’s stock price and the amount that Dominion has offered to pay for those shares in a merger dropped to its narrowest point ever — less than $3 — Monday, a sign investors are more confident than ever the deal will close.
Dominion announced its proposal to buy SCANA in January, framing itself as a white knight who could offer SCE&G’s customers some relief from power bills that rose by about $27 a month during the construction of two, now-abandoned V.C. Summer reactors.
But Dominion hasn’t been universally received with open arms, mostly because it intends to continue charging SCE&G customers for a power plant that does not exist.
Despite Dominion’s pleadings, S.C. lawmakers this summer passed a law temporarily slashing SCE&G’s rates by about $21 a month — nearly wiping out the portion of SCE&G’s electric bills earmarked to pay for the V.C. Summer project.
The state’s utility watchdog, the S.C. Office of Regulatory Staff, also has rebuffed behind-the-scenes overtures from Dominion to settle the fight over SCE&G’s electric rates, including Dominion’s most recent offer to cut SCE&G’s rates by about $22 a month.
So have environmental groups, including the Sierra Club, and consumer-focused organizations, including the AARP.
Instead, Regulatory Staff led the case before the Public Service Commission to slash SCE&G’s rates deeper than Dominion has proposed, alleging the Cayce-based utility fraudulently won rate hikes on its customers for a failing project. Dominion has threatened to withdraw its buyout offer if the PSC adopts Regulatory Staff’s proposal.
“We stood our ground in the negotiation process,” Regulatory Staff spokesman Ron Aiken said Monday. “ORS is going to operate in the ratepayers’ best interests. Through this entire process, we’ve never wavered once from that mission. It was designated as such by the Legislature, and we’ve taken it seriously. We haven’t backed down.”
House Speaker Jay Lucas, R-Darlington, said Monday that eliminating SCE&G’s entire $27-a-month nuclear surcharge would be ideal but likely not legal under the state Constitution. He endorsed Dominion’s proposal after the Virginia-based company offered a $22-a-month permanent rate cut, slightly larger than the temporary cut passed by the General Assembly this summer.
“That combination of rate relief and customer refunds is consistent with the House’s position to maximize immediate and long-term rate relief,” Lucas wrote in a statement.
Not all lawmakers are on board.
Senate Majority Leader Shane Massey, R-Edgefield, said Dominion was not honest with lawmakers or the public when its officials testified earlier this year they had made their best and final offer for SCANA. Dominion later revised that offer twice, lowering the amount SCE&G electric customers would have to pay for the failed V.C. Summer project each time.
When the General Assembly reconvenes in January, Massey told The State he will push for a special law to “securitize” SCE&G’s remaining $5 billion in nuclear construction debt. That debt-repayment mechanism would reduce SCE&G customers’ power bills but also lower the utility’s profits. Dominion has threatened to walk away if the debt is securitized.
“By the information we’ve been given, that is the best scenario for customers,” Massey said.
As it ponders SCE&G’s future ahead of the Dec. 21 deadline for its ruling, the PSC likely is feeling the pressure.
Approve the Dominion deal, and some SCE&G customers will be irate at having to pay at least $1,600 more over the next 20 years for unfinished reactors. (Regulatory Staff’s proposal would see those customers pay about $1,300 over the span.)
On the other hand, cut SCE&G’s electric rates too sharply, and Dominion has promised to walk away, withdrawing its promise to slash SCE&G’s bills.
Such a ruling inevitably would spark a lengthy court battle over who should pay off SCE&G’s nuclear debt, and the Cayce-based utility has threatened — to much skepticism — it could file for bankruptcy.