Regulators approve Dominion’s buyout of SCANA: What it means
SCANA shareholders and retirees, and S.C. business leaders say Friday’s approval of Dominion Energy’s buyout of Cayce-based SCANA is bittersweet, leaving some anxious over possible job losses.
S.C. utility regulators Friday gave the Virginia-based power giant the OK to buy South Carolina’s largest homegrown power company.
SCANA shareholders voted to approve the sale this summer, a year after the utility walked away from a failed effort to build two nuclear reactors.
SCANA and its minority partner in that project, the state-owned Santee Cooper utility, abandoned the reactors after spending a decade planning and building in Fairfield County, saddled with billions in debt.
Columbia resident Barbara Ligon, 66, spent 16 years working in customer service at SCANA and bought stock in the company.
While happy at the prospect of recouping her investment, swapping devalued SCANA shares for more valuable shares in Dominion, Ligon, who retired last year, worries about the fate of her former colleagues. She also is concerned about losing a locally owned corporation to an out-of-state company that now will call the shots.
“I just hope there will not be any layoffs with current employees,” Ligon said. “They’re a little excited, but just concerned if they will still have a job.
“No one has told them anything about their positions or their jobs,” Ligon said of speaking with former co-workers. “They’re not sure what kind of changes will be made.”
Five Points business owner and SCANA shareholder Joseph Azar said he has heard from SCANA employees who say the company has been bleeding staff over the past year and a half, as workers accept buyouts or jump ship.
For those employees who have stuck it out, many look forward to the financial stability that Dominion will bring, hoping that will bring job security, Azar said.
“We got a job. We’re doing a job. We assume we have a job. Otherwise, we don’t know. That’s the word I got from people inside,” Azar said.
‘We can keep a watchful eye’
In approving the buyout, the PSC required Dominion to give one of its board seats to a current SCANA director, keep SCE&G’s headquarters in Cayce and protect the salaries of current employees through at least July 1, 2020, even if they lose their job.
Linemen will not lose their jobs even after Dominion’s protections for SCANA employees expire in 2020, Dominion chief executive Tom Farrell has said. While administrative workers could be laid off or given incentives to retire, Dominion repeatedly has promised there would not be “significant layoffs.”
SCANA employees who do lose their jobs would be “given fair consideration for other employment” within Dominion, both inside and outside of South Carolina, according to a filing by the the Virginia-based company with the PSC.
The utility also will not change the pensions for current retirees, according to a Dominion spokesman, and it plans to increase SCANA’s charitable giving by $1 million a year.
“We are pleased with the opportunity to increase our presence in communities served by SCANA, expand our involvement in charitable giving and implement an EnergyShare-like program in South Carolina to assist low-income, elderly, disabled and veteran customers,” Farrell said in statement following the PSC’s decision.
Public Service commissioners said they would have preferred to keep SCANA — a longtime pillar of the S.C. business community — as a standalone company. But they worried rejecting the Dominion merger would send SCE&G teetering toward bankruptcy and threaten service reliability.
“While we don’t know what’s going to happen with those jobs down at SCE&G, what we know is ... Dominion will have to come in bi-annually and give us a report, at least for the first three years, of what’s happening with employment,” Public Service commissioner Justin Williams said. “How many folks are accepting (severance) packages? What are the current state of affairs? So, at least we can keep a watchful eye.”
‘End of an era’
SCANA stock shot up 6.3 percent to just under $51 a share, soaring to a 52-week high following Friday’s decision by the PSC. Dominion stock was trading at close to $77 a share.
Financial analysts predict Dominion could be one of the hottest high-yield blue chips of 2019, in part because of the merger, which will expand Dominion’s customer base by about 20 percent, according to Seeking Alpha.
That will be a relief to SCANA shareholders, many in South Carolina.
This past year, those shareholders saw their dividends decreased by 80 percent. The value of SCANA’s shares also plummeted before rebounding this fall.
Azar, the Five Points business owner, bought SCANA stock when it was close to $70 a share, about a year before the nuclear project’s collapse.
“It was between Duke (Energy) and SCANA, and I said, ‘I’d invest in our local, South Carolina company,’” Azar said. “If I had put it in Duke, I would have made money. But I was investing in our state.”
Like many, Azar saw SCANA as a darling of South Carolina’s business community.
“You put your money in, you’re going to get your money out,” he said. “It was pretty much a guaranteed thing. ... It had always been a very well-run organization – very tight, very strong — and watched money carefully for decades.
“But, obviously, we had people who dropped the ball … and ran the place into the ground. It’s an end of an era.”
‘Long term is the unknown’
S.C. Chamber of Commerce chief executive Ted Pitts said he understands the concerns about trading an independent S.C. institution for a regional operator. But the benefits outweigh what is lost, he hopes.
“The business community has been looking for certainty and stability with utility rates,” Pitts said. “Dominion is a proven company that successfully manages systems across the region, and they’re seen as a good provider and will be able to bring certainly and stability that businesses are looking for. A weakened SCANA, still trying to operate the system, ultimately, that’s not in the interest of ratepayers.”
Danny Black — CEO of the Southern Carolina Alliance, a Lowcountry economic-development group — agreed.
“A stable energy provider is critical to the future economic health of South Carolina,” Black wrote to the PSC in support of the merger. “Maintaining lower rates and providing stable services creates an environment that attracts economic investment and opens the door to increased job creation.”
Added Carl Blackstone, chief executive of the Columbia Chamber of Commerce, “Businesses run better when there’s consistency and predictability in the market, and utility costs are a big issue for businesses.
“Anytime you have a brand name that’s been here for so long and then sell ... to someone not from the region, I can see why folks are a little disappointed,” Blackstone said. “(But) Dominion has made a commitment to maintain a lot of SCANA staff and employees. I don’t’ see a significant impact in the short term.
“Long term is the unknown right now.”