Economy

Friends of the Earth/Sierra Club Statement on Dominion Takeover of SCANA

Friends of the Earth/Sierra Club Statement on Dominion Takeover of SCANA”

Virginia's Dominion Energy said Wednesday it will buy embattled SC electric utility SCANA for about $7.9 billion in stock. Payments will come within 90 days after the merger closes, and will vary based on how much consumers spent on electricity. It also would write off $1.7 billion of the plants' value, meaning it would stop collecting money for the plant from ratepayers after about 20 years, and spend $180 million to replace some of the power the nuclear plant would have generated.

The proposed 5% reduction in residential rates for SCE&G customers will consist of refunds of amounts previously collected from ratepayers as well as a pass-through of lower corporate taxes the utility will pay as a result of the federal tax bill signed by the president on December 22.

The deal will also result in an estimated additional 5 percent rate reduction from current levels, equal to more than $7 a month for a typical SCE&G residential customer. SCANA has been vulnerable to takeover as it's facing financial and regulatory woes due to pursuit by its subsidiary South Carolina Electric & Gas (SCE&G) of two nuclear reactors that were canceled on July 31, 2017, after a waste of $9 billion. Via a series of rate hikes, SCE&G customers have paid about $2 billion toward the company's debt on the project. Project partners Scana and Santee Cooper said finishing the reactors could cost $25 billion.

The proposed merger hinges on approvals by SCANA's shareholders, the U.S. Federal Trade Commission (FTC)/the U.S. Department of Justice (DOJ) under the Hart-Scott-Rodino Act, and authorization of the Nuclear Regulatory Commission (NRC), and Federal Energy Regulatory Commission (FERC). The only way to resolve this travesty is to sell Santee Cooper.

SCE&G is expected to file a formal abandoned nuclear project cost recovery petition with the South Carolina Public Service Commission around January 8, which FOE said would provide "important details on Dominion's proposed deal". "There is more work to be done, but today, we are headed in the right direction". In particular, SC regulators would have to approve Dominion's plan for customer refunds, executives said during a conference call Wednesday morning. "It would lock in significant and immediate savings for SCE&G customers - including what we believe is the largest utility customer cash refund in history - and guarantee a rapidly declining impact from the V.C. Summer project", he said in a statement. I let them speak for themselves.

The deal represents a 42 percent premium to SCANA's most recent closing price. In November, The State of Columbia reported that SCANA had hired investment bank Morgan Stanley to investigate a possible sale. And SCANA's CEO and Chief Financial Officer both stepped down as of January 1.



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