As it turns out, $60 million spread among 1.1 million people isn’t that much money for most customers.
That was the lesson learned this week when electric customers of Dominion Energy South Carolina received the first round of checks that will refund a tiny percentage of what those customers were charged for a nuclear power plant that was never completed.
In many cases, those refund checks — which stem from a class-action lawsuit by South Carolina ratepayers — were comically low, according to customers posting screenshots of settlement checks as meager as 4 cents on Facebook and Twitter over the past week, prompting other current and former ratepayers to share the pittance they got back.
“It’s not worth the postage,” Scott Elliott, a Columbia attorney who represents large energy users, said of his own 8-cent check. “It’s 8 cents that we didn’t have before, but it is going to be a stretch to justify the time to make the deposit.”
Some 41,000 customers — a mix of households and large energy users, such as businesses — got more than $100. But many others got $80, $30, $10 or just pennies.
For many of the utility’s 728,000 electric customers, the frustration of receiving such low refund checks has been compounded by an apples-to-oranges comparison of these checks to the $1,000 refunds that were promised last year when Virginia-based Dominion Energy was drumming up public support for its offer to purchase SCANA.
And a great deal of confusion has surrounded the checks this week, in part because of the lack of answers or rationale offered by the court-appointed administrator sending them. Consider:
It is not crystal clear how the refund checks were calculated, other than that they were based upon electric usage (and thus, how much each customer paid in higher power bills for the failed project).
Nor is it easy for any customer to accurately estimate how much he or she will get back.
(A back-of-the-napkin review of the past electric bills and refunds for reporters in The State’s newsroom indicates the refunds are less than 3% of what they paid for V.C. Summer.)
But ratepayer attorneys say that number is far from what customers actually are getting out of the lawsuit.
First, how we got here
Customers of SCE&G — now called Dominion Energy South Carolina — collectively have paid more than $2 billion (or about $1,565 for an average household) in higher electricity rates since 2008 to finance the Cayce-based utility’s mammoth effort to build two more reactors at the V.C. Summer Nuclear Station in Fairfield County.
That project was terminated in July 2017 after years of budget overruns and construction delays.
Ratepayers sued the company, complaining they were being charged $27 a month for a construction project that was mismanaged and never completed. Those lawsuits ended in a settlement that included the checks customers are getting now.
The settlement featured up to $200 million in cash refunds for customers. That money stems from future SCE&G real estate sales and a pot of cash the power company tried to set aside for departing executives.
Don’t forget that $22 a month
Now to break down the money.
Of the $200 million in settlement cash, attorneys involved in the case got $54 million in fees.
About $60 million was distributed to ratepayers this month.
And another round of checks — worth up to $85 million in sales of former SCE&G real estate — eventually will be sent to customers when that land is sold. So, at some point, you can expect to get another check worth slightly more than the one you just got.
But there is another silver lining for disappointed ratepayers.
Ratepayer attorneys say customers criticizing the checks are ignoring the attorneys’ biggest contribution: building a legal case against SCE&G that helped lead to the $22-a-month rate cuts that were implemented in February.
“In retrospect, if people were getting that $22 a month in the form of a monthly check instead of a rate credit, they would feel differently,” said Edward Westbrook, one of the ratepayer attorneys.
What about the $1,000 Dominion refunds?
Gone. And that’s not a bad thing for ratepayers, if you do the math.
Dominion’s first offer to buy SCE&G included cutting the utility’s electric rates by $10 a month and giving those customers $1.3 billion back in refunds — or about $1,000 for the average household.
Some state elected officials and candidates initially liked that idea, and many customers still do. The $1,000 checks were part of an effective marketing strategy by Dominion that built public support for the deal.
But top lawmakers and the state’s utility watchdog saw the $1,000 checks as a payday loan: Dominion would refund the typical household $1,000 for the nuclear project up front, then charge that same customer $4,000 for the project over the next 20 years.
Conscious of that backlash, Dominion later sweetened its deal. That offer dropped the $1.3 billion in refunds, putting that money instead toward paying down the V.C. Summer debt. That move allowed the utility to lower power bills by $22 a month instead of just $10 a month.
That means the typical residential customer now will pay about $1,600 over the next 20 years for V.C. Summer — instead of the $3,000 that same customer would cough up under the $1,000 refund deal Dominion said it preferred all along.
So on the flip side...
Your first refund check for the unfinished power plant is probably paltry, given what you paid for it. But you eventually may get another one that is slightly bigger.
You are still paying for V.C. Summer — about $5 a month for average household — but that’s $22 a month less than you were paying two years ago and $12 a month less than you would be paying if Dominion’s $1,000 refund offer was accepted.
Attorneys involved in the case made a lot of money — almost as much as the first round of refund checks for ratepayers. But that was money that otherwise would belong to the utility and its executives.