January 03, 2018 09:15 AM
UPDATED 1 MINUTE AGO
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 that 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 that 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 around 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 will not provide a kilowatt of power. State lawmakers also will begin considering legislation next week that would cut off payments for the nuclear project, which account for 18 percent of customers' electric bills, or $27 a month.
SCANA Corp. shareholders will receive 0.6690 shares of Dominion common stock for each share of SCANA, under the stock deal Dominion is valuing 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 that is part of plans 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 South Carolina and North Carolina. The combined company would operate in 18 states, providing energy to about 6.5 million regulated customer accounts.
Last month, SCE&G 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 that announcement, was up in early trading Wednesday while Dominion stock was down slightly.
On a morning call with investors, 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.
"There is more work to be done, but today, we are headed in the right direction," McMaster said.
Rep. Micah Caskey, a Republican state representative whose district includes SCANA's headquarters, said the deal seemed like a good one at first glance but reserved his skepticism.
"We need to review the details before we act or before we choose not to act," he told The Associated Press on Wednesday. "South Carolinians deserve reliable electricity from an honest provider. I hope this plan is a step toward that goal."
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