In a monumental deal made public on Wednesday, Dominion Energy and Scana Corporation announced a conditional merger that would roll debt from the failed V.C. Summer nuclear project into one of the country’s largest utilities.
Under the merger, Scana investors would get two-thirds of a Dominion share for every Scana share. The share swap, plus debt, amounts to $14.6 billion.
The deal adds over a million customers to the Dominion empire, extending its reach to 6.5 million customers in 18 states.
If approved, Dominion says it plans to cut electricity rates in South Carolina Electric & Gas service territory by 5 percent, write off $1.7 billion in capital expenditures, and offer $1.3 billion in cash payments to customers.
Dominion said ratepayers will still pay $20 each month over 20 years for Scana's abandoned nuclear reactors. That’s a better deal than the 50- to 60-year payback and 3.5 percent rate cut offered in November by SCE&G.
“For our customers, I hope today’s announcement represents a positive resolution to what has been a very difficult situation -- a situation that is far better than we can do on our own,” said Scana CEO Jimmy Addison.
It would offer relief to ratepayers who have paid billions for the unfinished V.C. Summer nuclear plant for years.
When finally canceled, the project cost $9 billion -- without a single electron ever being delivered. Project partners Scana and Santee Cooper said finishing the reactors could cost $25 billion.
The Dominion-Scana merger is contingent on approval from regulators in the Carolinas and Georgia, the Federal Trade Commission, and Scana shareholders.
In the end, the sale may depend more on politics than business. A law in South Carolina, the Base Load Review Act, allowed Scana to keep collecting money from customers even though the company canceled the V.C. Summer nuclear project. Lawmakers may also consider ditching the legislation when they return next week.
A Republican state representative, Micah Caskey, told the Post and Courier that “this sounds like a better deal for ratepayers." Another Republican legislator, State Senator Shane Massey, said it was hard to continue asking customers to pay for undelivered electricity.
Although Dominion CEO Thomas Farrell told investors Scana was “a natural fit," he threatened to walk away if regulators challenged the deal.
Scana’s V.C. Summer partner, Santee Cooper, is still up for sale. That company has $4 billion in debt from the failed project, for which ratepayers are still liable.
“The only way to resolve this travesty is to sell Santee Cooper,” said South Carolina Governor Henry McMaster in a statement. “There is more work to be done, but today, we are headed in the right direction.”