Dominion threatens to leave SCE&G deal if South Carolina lawmakers cut rates

Dive Brief:

The State Newspaper in South Carolina reports lawmakers appear committed to reducing SCE&G customer bills, cutting the amount they pay for the failed V.C. Summer nuclear development. But the reduction could come at a price.
Dominion Energy has indicated again it will drop its bid to acquire SCANA Corp., the parent company of SCE&G, if lawmakers follow through on a rate reduction. The merger offer already includes a rate reduction and customer refunds up to $1,000.
Currently, roughly 18% of SCE&G customer bills goes to pay for the nuclear debacle. There are multiple rate reductions on the table, making it more likely one of them will be passed. It is unclear if there is a rate cut Dominion could accept.

Dive Insight:

Lawmakers in South Carolina are intent on passing a rate cut, but if they reach an agreement will it be good for customers? Dominion has offered to cut customer bills by about $10 per month and is offering refunds of about $1,000. Lawmakers are considering cutting the entire nuclear charge from monthly bills or some significant portion of it.

Dominion CEO Tom Farrell said in a statement that "If the Legislature intervenes and enacts policy into law, such as amended S. 954, this materially changes the grounds for Dominion Energy’s proposal.”

The utility has also said that cutting customer bills too deeply could force it into bankruptcy.

In the Senate, lawmakers are considering proposals to cut rates about 13%—the maximum possible, according to a recent report, without forcing SCE&G into bankruptcy. In the House, lawmakers have proposed eliminating the entire charge. Gov. Henry McMaster has said he would veto the Senate proposal as structured right now.

In January, McMaster said he believes SCE&G should be forced to pay for the failed development of the nuclear plant—a sentiment which caused shares of SCANA Corp. to plunge. Ratepayers are currently paying $37 million a month for the project.

The $14.6 billion all-stock merger valued SCANA at $55.35/share. It is now trading about $37/share, indicating investors have scant hope for the deal.

SCANA abandoned the V.C. Summer nuclear plant last summer after spending $9 billion in ratepayer funds. The plant was originally estimated to cost less than $12 billion. Mismanagement and problems with reactor design from contractor Westinghouse raised final cost estimates to $25 billion. State owned Santee Cooper was SCANA's partner on the development.