Regulators approve Dominion’s buyout of SCANA: What it means
Dominion Energy has won approval to buy Cayce-based SCANA in a multi-billion-dollar deal that will affect hundreds of thousands of South Carolina power customers for decades to come.
S.C. utility regulators Friday gave the Virginia-based power giant the green light to buy South Carolina’s largest homegrown power company, despite loud protests from environmentalists that temporarily shut down the S.C. Public Service Commission’s hearing.
Dominion’s offer includes an up-to-$22-a-month rate cut for customers of SCANA’s electric subsidiary, SCE&G.
But it ensures those 730,000 customers will pay another $2.3 billion — or $1,600 for the average household over the next 20 years — for SCE&G’s failed V.C. Summer nuclear construction project. And, after some internal debate, the PSC voted not to rule that SCE&G had lied to the commission to keep the struggling project alive.
“No one will be happy with any decision we made here today,” said PSC member Justin Williams. “But at the end of the day, it’s incumbent upon us to make a decision that provides the greatest good for the greatest number of people here in South Carolina. And Plan B-L (Dominion’s offer) does that.”
Barring an appeal, the PSC decision would settle the almost 17-month legal and political firestorm that began in July 2017 when SCE&G and state-owned Santee Cooper pulled the plug on their decade-long, $9 billion project to build two nuclear reactors in Fairfield County.
After nine rate hikes, SCE&G customers have paid some $2 billion for the unfinished, and now abandoned, reactors. About 18 percent of their bills — or $27 a month for the average residential customer — went to the project.
In approving the buyout, the PSC required that Dominion give one of its board seats to a current SCANA board member, that SCE&G’s headquarters remain in Cayce and that the salaries of SCANA’s current employees be protected at least through July 1, 2020.
“Dominion Energy is encouraged by the Commission’s vote and awaits an order to review prior to making a final decision to close the merger with SCANA,” Dominion chief executive Tom Farrell said in a statement.
SCANA CEO Jimmy Addison said the company is pleased to be “one step closer to a final resolution and the certainty that stakeholders have been hoping for.”
S.C. Gov. Henry McMaster, R-Richland, and House Speaker Jay Lucas, R-Darlington, issued statements Friday afternoon supporting the PSC’s decision.
As it became clear the PSC was going to OK Dominion’s offer, seven environmentalists stood and began shouting at the commissioners. They held up cloth signs opposing the Dominion deal and chanted, “Dominion buyout, more of the same, we want solar for a change!” as they circled the hearing room for several chaotic minutes.
The commissioners left the room and returned only after the protestors had gone outside. At least two Lexington County Sheriffs Department deputies were on site by the end of the hearing, but the department made no arrests, a spokesman told The State.
The PSC’s approval was the last blessing Dominion needed to close the deal.
It was widely expected after S.C. Attorney General Alan Wilson, R-Lexington, and Speaker Lucas publicly endorsed Dominion’s offer. Attorneys suing SCANA on behalf of SCE&G ratepayers also agreed to settle their lawsuits if the Dominion deal closes.
In approving the Dominion deal, the PSC rejected several suggested conditions requested by South Carolina’s state utility watchdog, the Office of Regulatory Staff. Among them was a suggestion the PSC require the debt to be repaid through securitization, a mechanism that would lower SCE&G customers’ rates but also reduce the utility’s profits as it pays off that debt.
Dominion has said it would withdraw its offer for SCANA if the PSC ordered the debt be securitized.
“The Commissioners had a difficult decision to make,” Regulatory Staff executive director Nanette Edwards said. “Throughout this process, the Office of Regulatory Staff has fought to represent the interests of customers and remained firm on issues safeguarding customer interests.”
Edwards said she would need more time to consider whether Regulatory Staff will file an appeal with the PSC. Scott Elliott, an attorney for SCE&G’s large industrial users, said he also would need to see a written ruling from the PSC before he will decide whether to appeal it.
One by one, PSC commissioners said they would have preferred to keep SCANA — once the darling of South Carolina’s business community — as a standalone company. But they worried rejecting the Dominion deal and imposing a bigger rate cut would send SCE&G spiraling toward bankruptcy and threaten the utility’s service reliability.
Regulatory Staff and several consumer groups had pushed the PSC for a deeper rate cut than Dominion was offering.
The PSC will issue a written order with more details on its decision by Dec. 21.
But the PSC will not issue an official finding that SCE&G intentionally misled the commission, starting in 2015, to win rate hikes for a failing project — after a contentious debate Friday among the commissioners.
Over the course of a November hearing into the V.C. Summer project’s failure, Regulatory Staff made the case that SCE&G executives withheld important documents detailing the project’s flaws and filed unrealistic cost numbers with the PSC. Regulatory Staff also had pushed the PSC for a finding that SCE&G’s conduct was fraudulent.
“It lets the public know that this kind of conduct is not going to be tolerated in the future, not just by SCE&G but by any utility that comes before us,” PSC member Tom Ervin said.
Ervin was overruled. Other commissioners, including Elliott Elam, said they weren’t comfortable the evidence supporting that finding. They also said it was unnecessary because Dominion had agreed not to charge customers for any costs incurred after the alleged fraud.