South Carolina customers could see refunds in a utility sale
A proposed deal announced Wednesday could mean $1.3 billion in refunds for customers of a troubled South Carolina utility who have been funding a failed nuclear reactor project.
In a news release, Richmond, Virginia-based Dominion Energy announced it would make immediate $1,000 cash payments to SCANA Corp. (SKAH-nah) customers within 90 days of closing its purchase of the company. If approved by regulators, the deal would also cut rates for customers of SCANA subsidiary South Carolina Electric & Gas Co. by about 5 percent, an amount officials said would mean more than $7 in monthly givebacks for customers.
SCANA has been reeling since announcing last summer SCE&G was abandoning construction of two new nuclear reactors at the V.C. Summer Nuclear Station. Thousands were left jobless in the wake of the $9 billion failure, which SCE&G and project co-owner Santee Cooper blamed on the bankruptcy by lead contractor Westinghouse.
The debacle has spawned multiple lawsuits, with customers accusing SCANA executives of misleading them about the project's viability. State lawmakers have opened inquiries, and both state and federal authorities are investigating.
The $14.6 billion deal with Dominion would still leave SCE&G customers holding the bag on funding the scuttled construction but would reduce the timetable on those payments, from up to 60 years down to about 20 years, officials said. Via a series of rate hikes, SCE&G customers have paid about $2 billion toward the company's debt on the project.
South Carolina regulators are considering whether SCE&G customers should continue shouldering that debt, paying $37 million a month for work that won't provide a kilowatt of power. Next week, state lawmakers will begin considering legislation that would cut off project payments that account for 18 percent of customers' electric bills, or $27 a month.
SCANA shareholders will receive 0.6690 shares of Dominion common stock for each share of SCANA, under the stock deal Dominion values at about $7.9 billion, with an additional $6.7 billion in assumed debt.
If the deal is approved, SCANA would become a wholly owned subsidiary of Dominion, which already has some holdings in South Carolina. It also includes completion of the $180 million purchase of a 540-megawatt, natural gas-fired power plant, a proposal announced by SCE&G President Keller Kissam in November.
Dominion, one of the nation's largest utility companies, already operates a pair of solar farms in South Carolina, as well as a network of gas pipelines purchased from SCANA two years ago. SCANA has about 1.6 million electric and natural gas residential and business accounts in the Carolinas. The combined company would operate in 18 states, providing energy to about 6.5 million regulated customer accounts.
SCE&G has formally asked the Nuclear Regulatory Commission for permission to withdraw its operating license for the reactors, a move the company made as it seeks to show it's entirely given up on the project and is eligible for a $2 billion tax write-off.
SCANA's stock, which has tumbled about 40 percent since July, was up in early trading Wednesday, while Dominion stock was down slightly. Both companies ended the day roughly flat.
On a morning investor call, Dominion Chief Executive Tom Farrell said he was "very pleased" about reaction to the deal from South Carolina leaders including Gov. Henry McMaster and House Speaker Jay Lucas. In a statement, McMaster said the deal would give money back to SCE&G ratepayers but reiterated his stance that state-owned utility Santee Cooper needed to be sold to account for its share of $4 billion debt in the project.
Lucas said Wednesday the acquisition is "an interesting starting point" but more fixes are needed. Senate President Pro Temp Hugh Leatherman said he looked forward to a briefing from company officials.
In a news release, Friends of the Earth said the deal "falls far short of protecting ratepayers" from absorbing costs of the failed project. Friends of the Earth and the Sierra Club have a complaint pending before South Carolina regulators seeking repayment to customers and a future commitment to pursue cleaner, cheaper, alternative energy.
Dominion's proposed purchase didn't immediately alter its plans for a potential new nuclear plant in Virginia, which one regulator has estimated would cost more than $25 billion. The company has spent more than $600 million on the project, known as North Anna 3, but has not committed to building it. A 2014 state law allowed Dominion to write off about $300 million in planning costs related to the project, a move that helped the company avoid having to give bigger refunds to its customers.
Spokesman Ryan Frazier said Wednesday the company has still not made a decision whether to build North Anna 3.
Alan Suderman and Sarah Rankin in Richmond, Virginia, contributed to this report.
Kinnard can be reached at http://twitter.com/MegKinnardAP. Read her work at https://apnews.com/search/meg%20kinnard .