Dive Brief:
- SCANA has reached a settlement with litigants in a customer-led class action lawsuit that would return $2 billion to South Carolina Electric & Gas ratepayers and conclude most issues surrounding the cost of the failed development of the V.C. Summer nuclear plant.
- The settlement must still receive a judge's approval, and hinges on the South Carolina Public Service Commission approving Dominion Energy's bid to purchase SCANA and its utility, South Carolina Electric & Gas (SCE&G). The deal also calls for using SCANA's $115 million golden parachute fund to refund customers.
- The settlement is similar to Dominion's most recent offer for SCANA, which would cut average customer bills by more than $22/month.
Dive Insight:
With more than $2 billion in benefits, the settlement would go a long way toward unraveling the V.C. Summer nuclear debacle.
If everything goes as planned, Dominion will acquire SCANA and customers will get a big chunk — though not all — of the billions they have paid for a power plant that was never finished.
The settlement includes three main parts: electric rate relief, liquidation of a fund set aside for executives who lose their job in the acquisition by Dominion, and the sale of some SCE&G-owned real estate to fund customer credits.
The conclusion of the customer-led lawsuit will end a major avenue South Carolina has used to explore the V.C. Summer failure, and discover what went wrong. However, a shareholder lawsuit is still in progress, digging into whether SCANA misled its shareholders about the project's outlook.
SCANA and its partner on the project, Santee Cooper, decided in July 2017 to abandon efforts to build two new nuclear reactors. As engineering difficulties mounted and the project fell behind schedule, SCE&G customers saw their rates rise multiple times. The average customer's bill included almost $30 in nuclear development costs, local news outlets reported.
When the project was canceled, officials had concluded total costs could have exceeded $25 billion — a 75% increase over initial estimates.
If approved, South Carolina Attorney General Alan Wilson said the settlement, which he called "the largest of its kind" in the history of the state, would end the state's pursuit of ratepayer restitution, "but does not end our inquiry into the individual actors that may have contributed to the project’s failure."
Wilson thanked Dominion in a statement for its "willingness to provide the financial resources necessary to make this restitution." He also pointed out the company "was not involved in the creation of this situation, and we appreciate its role in finding a resolution that serves the best interests of SCE&G ratepayers."
The settlement is also in Dominion's best interests. The company has been dogged in its pursuit of the SCANA acquisition, and just this month made a third offer for the company.
The latest proposal would cut average customer bills by more than $22/month — lower than Dominion's previous offers, and also slightly below the temporary rate cut provided by South Carolina legislators, which expires next month.
Dominion's second proposal, which it made in October, offered a total of $1.91 billion in refunds over a 20-year period, compared with its originally-proposed $1.3 billion in upfront cash refunds that would have amounted to about $1,000 per customer.
The deal has already been approved by shareholders, federal regulators and North Carolina and Georgia utility commissions. Only the South Carolina PSC remains to approve the acquisition.
