Dominion Energy has taken on a high profile in South Carolina with its proposed purchase of SCANA Corp., the troubled parent company of S.C. Electric & Gas Co.
The Virginia-based utility and SCANA announced a $14.6 billion merger in January in the wake of the South Carolina utility's ongoing problems surrounding the failure of a project to construct two new nuclear reactors in Fairfield County.
Since then, Dominion has been working to convince South Carolinians and their leaders that the merger is a good thing for the state, SCANA and its ratepayers and shareholders, and Dominion.
Dominion officials brought that message to Orangeburg County Council recently.
Dominion Energy External Affairs Manager Ty McBee and External Affairs Manager Charles Donato told council the company intends to be a good community partner.
“I’m very impressed with what I’ve seen here,” Donato said. “We want to come in and continue the good things you all are doing.”
“At the end of the day, you all are successful, you’re on the edge of more success and we want to be a part of that,” he said.
Dominion is the third-largest energy company in America. Donato said it competes mostly with Duke for the third and fourth positions.
“People say footprint, but I say we have a toe here,” McBee said.
In 2015, Dominion bought Carolina Gas Transmission, the natural gas transmission lines throughout the state. In total, Dominion is in 32 counties with 1,500 miles of natural gas lines.
If Dominion’s deal to purchase SCANA is completed, the average SCE&G residential customer is to receive an estimated $1,000 refund for the estimated $1.3 billion paid to the utility by customers for the failed nuclear project. Charging customers for the reactors was approved by the General Assembly in 2007 under the Base Load Review Act.
“This is the first time ever a utility has written checks to customers,” Donato said. “We’re about stability, we’re about predictability.”
Donato said the $14.6 billion deal entails Dominion buying the entire assets of SCANA.
“By all indications that I have, this is a well-run utility regardless of the investment in the two non-producing nuclear units,” he said. “I haven’t heard anything about changing that in any way.”
To make the merger happen, Dominion has said it must continue to be able to charge for the reactors.
Though rates would be reduced by about 5 percent from present levels, SCE&G customers would continue to be charged for the reactors for 20 years. At present, customers pay about $27 a month for the failed project. SCE&G had planned to continue that charge for up to 60 years. Dominion would cut the time period to 20 years.
“If the ability for us to charge customers for those non-producing nuclear units goes away, Dominion’s deal goes away,” Donato said. “We’ve got to be able to have a mechanism in order to charge ratepayers, albeit a reduced amount.”
“We’ve got to be able to have an income to be able to pay for the remainder of those assets,” he said.
Donato said the merger is not popular with Wall Street.
“Our stock took a hit,” he said. “We knew it was going to hurt.”
“Wall Street doesn’t like this deal but we like it because we want an operating company for 30 to 50 years,” he said. “We see past all the mess that’s happening right now and we don’t like it either but we see an operating company at the end of the day, for 30 to 50 years and that’s why we’re here.”
Donato said, “When we come here, we’re coming here long term.”
The General Assembly faces a decision on the Dominion proposal. Though lawmakers have no direct say on the merger, it is up to them whether Dominion will be able to continue charging customers for the reactors under the BLRA.
Already, the S.C. House has voted to prevent SCE&G or others from levying such charges. And lawmakers are also indicating they will not act definitively until a thorough study of the situation is complete in 2019.
Dominion has said it must move forward with the merger within six months, leaving lawmakers with a decision on not standing in the way or seeing the offer go away.
Rep. Russell Ott, D-St. Matthews, who was recently named co-chair of the House energy caucus, part of the South Carolina Energy Caucus, a bipartisan effort between the House and Senate to stay mindful of the state’s energy needs, has said legislators are in a tough spot. He favors no more charges for the reactors but is concerned about the future if the Dominion offer goes away.
SCANA has said it could face bankruptcy if SCE&G's ability to charge for the reactors is taken away. State regulators have disputed that assessment.
Dominion is the only company to date to make an offer for SCANA.