S.C. lawmakers have heard what Dominion Energy has to offer, and they think South Carolina can get a better deal.
The Virginia-based utility says it has made its “best and final” offer to buy troubled SCANA. No other company has proposed a deal that would better bail out the Cayce-based company’s 700,000 beleaguered electric customers. But some lawmakers publicly are asking for a competing offer.
The seven hours that S.C. lawmakers spent this week picking apart Dominion’s $14.6 billion agreement to buy SCANA and its SCE&G subsidiary left no clear answers as to how South Carolina’s nuclear fiasco will be resolved.
Nor did the hearings inspire confidence the Dominion deal actually will happen.
A number of deal-killing conditions are written into that deal. Also, there is uncertainty surrounding possible regulatory, legal and legislative actions that could follow SCE&G’s abandonment of a $9 billion nuclear construction project in Fairfield County.
Special Senate and House committees this week did not warm to Dominion chief executive Tom Farrell’s pitch that his company’s offer – with its refunds and rate cuts for SCE&G customers, and SCE&G on the ropes financially – is the only viable option. Instead of a welcome-to-South Carolina party, the hearings felt more like interrogations.
“I am nowhere near close to accepting a deal like this,” said state Rep. Peter McCoy, R-Charleston, who chairs the House committee weighing Dominion’s offer.
The ‘payday loan’ sticking point
If could take nine months for the Dominion buyout to be completed.
If that happens, Dominion says it will give refunds worth about $1,000 a household to SCE&G electric customers. Those customers have paid about $1,400 apiece over the past decade in higher electric bills for the failed nuclear expansion project.
Dominion also has offered to cut SCE&G’s power bills by about $7 a month. It also says it will shave to 20 — from 60 — the number of years that SCE&G customers will have to continue to pay higher electric rates to pay off the reactor debt.
But those 20 years are the sticking point.
Lawmakers spent much of the two hearings this week asking why Dominion still plans to charge SCE&G customers another $2.8 billion for the abandoned V.C. Summer project over that 20-year span.
Why, they asked, is Dominion offering that $1,000-a-household refund for the failed project if it plans to charge those same households another $4,000 for the same failed project down the road?
Dominion CEO Farrell responded his utility needs the cash flow from those continuing payments to make the deal palatable to its shareholders.
Dominion also said it felt SCE&G customers deserved the cash refund right away.
But lawmakers dismissed that part of the deal as a “payday loan” — an offer to give someone $1,000 if they would pay $4,000 later.
“I don’t believe that customers in South Carolina should have to continue to pay for a project they will receive nothing for,” said state Rep. Russell Ott, D-Calhoun, the special House committee’s vice chairman.
‘Dominion can certainly do better’
Lawmakers also bristled at what they called Dominion’s take-it-or-leave-it approach to the deal.
Farrell said Dominion would walk away if:
▪ The S.C. Legislature moves forward with its plans to repeal parts of a controversial 2007 state law, the Base Load Review Act, that would allow Dominion to continue to charge SCE&G’s customers for the nuclear debacle
▪ State regulators or courts decide that SCE&G fraudulently obtained previous rate hikes for the nuclear project, and seek to refund that money to customers
▪ Courts rule the Base Load Review Act is unconstitutional, as the S.C. Attorney General’s office suspects.
Other lawmakers had different concerns.
For example, State Rep. Todd Rutherford, D-Richland, grilled Farrell on Wednesday about Dominion’s plans for SCANA’s Cayce headquarters and its 5,000 employees.
“Dominion can certainly do better,” said Rutherford, who doesn’t want SCANA sold. “I don’t want to be a sharecropper, where we pick all the crops and the money goes somewhere else. For me, it’s about South Carolina.”
Linemen would not lose their jobs, even after Dominion’s protections for SCANA employees expire in 2020, Farrell said. And, while administrative workers could be laid off or given incentives to retire, Farrell promised repeatedly there would not be “significant layoffs.”
‘The least harmful deal’
Despite those assurances, the hearings left many lawmakers unsold on the deal, with some openly hoping another offer might surface.
Florida-based NextEra Energy, which hired eight S.C. lobbyists before the start of this year’s legislative session, and North Carolina-based Duke Energy are said to be interested in buying SCANA, too. However, neither publicly has announced an offer or acknowledged any interest.
But, one state senator said, both utilities had representatives monitoring this week’s legislative hearings.
Midway through the Senate’s Tuesday hearing, state Sen. Mike Fanning, D-Fairfield, asked audience members to stand if they were paid lobbyists, attorneys or staffers of a utility. After a pause, most of the crowd rose to their feet.
Afterward, Fanning said he just wanted to show that other companies — NextEra, in particular — are interested.
“We were told, over and over again, ‘You’ve got one option,’ or ‘You’ve got to take it the way it is now,’ ” Fanning said. “When I looked out over that audience to see there were other players in the game that wanted to make a bid ... we wanted to make sure that all the offers come to the table at the same time so that we can make a decision about what’s in the best interests of the ratepayers of South Carolina.”
Even after seven hours of hearings, the Legislature needs more questions answered before it can begin to work toward a solution, said Senate Majority Leader Shane Massey, the Edgefield Republican who co-chairs the Senate panel evaluating Dominion’s offer.
“It’s our job to try to dig a little deeper ... to make sure it’s a good deal or at least it’s the least harmful deal that’s available to customers, to employees, to the state as a whole.”
Avery G. Wilks: 803-771-8362, @averygwilks
This story was originally published January 18, 2018 2:30 PM.