Dive Brief:
- Dominion Energy and SCANA Corp. floated raising customer refunds to $1,500 in order to gain support for the pair's proposed merger — though with caveats that included lawmakers killing a bill to lower rates of South Carolina Electric & Gas (SCE&G) customers by 15%.
- State lawmakers passed a temporary rate cut for SCE&G in June related to the utility's failed V.C. Summer nuclear power project, but the rate cut puts the $14.6 billion Dominion-SCANA merger at risk.
- The companies offered the enhanced customer refunds in an unsuccessful attempt to escape the rate cut bill, WIS TV reports. The merger is designed to bail out SCANA, SCE&G's parent company, which faces billions in costs due to the canceled nuke.
Dive Insight:
WIS TV's report that Dominion and SCANA were willing to raise customer rebates to $1,500 shows just how excited both companies are about the possible merger. But it also highlights the extent to which South Carolina lawmakers will oppose efforts to have ratepayers on the hook for V.C. Summer costs.
SCE&G is seeking regulatory approval to recover about $5 billion in costs associated with the Summer project from ratepayers. In addition to the 15% rate decrease, the law may limit the utility's ability to recover some costs.
Dominion originally offered a $1,000 customer rebate and a 7% rate decrease if the merger goes through, but tried to up the offer last month as lawmakers neared a decision. WIS reports SCANA would have fronted an additional $300 million to pay for the additional refunds, largely by cutting quarterly dividends.
But the companies also wanted lawmakers to kill the rate reduction bill and publicly support the merger in an attempt to sway regulators at the Public Utilities Commission. Ultimately, lawmakers rejected the idea.
The state House voted 109-4, passing the bill; the Senate passed the bill 37-2 in April.
While Dominion Energy CEO Thomas Farrell has said efforts to preclude the recovery of the Summer investment would scuttle the deal, not everyone is convinced.
"I don’t agree that it would imperil the deal," analyst Katie Bays, senior vice president of energy and industrials at Heights Securities, told Utility Dive last month. "It is unlikely he would walk away because of an interim rate cut."
