The new year brings a new utility to many Southeastern customers, as Dominion Energy and Scana Corporation finalized the merger the companies have plotted for a year.
Scana, which operates in Georgia, South Carolina and North Carolina, will now become a fully owned Dominion subsidiary managed under a new “operating segment” called the Southeast Energy Group.
Dominion paid $6.8 billion and assumed about $6.6 billion of Scana’s net debt. The utility will also disperse $2 billion in “monthly bill relief” over 20 years to defray costs tied to the now-canceled VC Summer nuclear expansion that South Carolina ratepayers are still paying for.
Under the latest approval from South Carolina’s Public Service Commission, customers won’t get money back for what they’ve already paid for the project — about $2 billion. But Dominion will freeze base rates for customers of Scana subsidiary South Carolina Electric & Gas through January 2021. It will also cover much more of the cost for the failed project than SCE&G had requested. The average household will pay $1,700 over 20 years, rather than SCE&G’s proposed $6,000.
In an announcement on the final merger, Scana’s CEO Jimmy Addison said the “two companies share common values” and that Scana will embrace the change. Dominion’s CEO Thomas F. Farrell said the company is “pleased to add Scana’s fast-growing, high-performing Southeastern businesses” to its 18-state portfolio.
Dominion now has approximately 3.3 million electric utility customers in the Carolinas and Virginia, with the same number of natural-gas customers in seven states.
The deal was a struggle to finalize. Though the companies spun it as the "most comprehensive solution" to the VC Summer debacle, Scana and Dominion still needed certain approvals from Scana shareholders, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and the Federal Trade Commission, as well as regulators in North Carolina, South Carolina and Georgia.
Scana and Dominion’s proposal also deepened debates about the fate of large-scale nuclear in the U.S., the role of monopoly utilities and the legitimacy of South Carolina’s Baseload Review Act, which allowed Scana to collect funds from ratepayers before it completed VC Summer.
The final announcement of the merger coincides with a push from clean energy advocates for changes in South Carolina. On Wednesday, groups including the Solar Energy Industries Association, the South Carolina Solar Business Alliance, Vote Solar and the Southern Environmental Law Center (SELC) announced a “100 Day Clean Energy Agenda” that calls for legislation that makes the state friendlier to the development of renewables, including changes such as eliminating the state’s net metering cap and allowing direct contracts between businesses and independent power producers.
According to Blan Holman, managing attorney in SELC's South Carolina office, the state has just lived through an "energy planning nightmare." And though the deal has finally gone through, it's still being challenged. SELC filed a motion for rehearing with the PSC along with other clean energy groups, asking the commission to reconsider its order that approved the merger. The organization is particularly concerned with "Dominion’s pattern and practice of making captive ratepayers of its regulated subsidiary pay for the parent company’s Atlantic Coast Pipeline," which SELC has argued may be less economic than options like solar.
Thad Culley, Vote Solar’s Southeast regulatory director, said Dominion is moving further into the state at a “a critical time for solar.” South Carolina has a net metering cap of 2 percent of total generation, which Duke has already hit.
“Dominion has the opportunity to show leadership and to support solar policies that are overwhelmingly popular with the customers they have lobbied regulators and lawmakers for the right to serve,” Culley said.
If advocates are successful in their 100-day campaign, Dominion and its Scana subsidiary could be working within an energy policy framework that looks much different from the one in which SCE&G operated.
Republican state Senator Tom Davis, who sponsored a bill this year requiring utilities to buy from independent power producers if the power they produce is cheaper, said in a statement that “utility monopolies have written South Carolina’s energy policy for too long.”
“It is time to break the utility stranglehold and allow energy competition in the residential and corporate sectors, while allowing large-scale solar providers to compete to put low-cost energy on the grid,” said Davis. “More competition means lower costs, which means lower bills. It just makes sense.”
As that campaign pushes through April 10, South Carolina is still working to fix the other half of the VC Summer failure. Scana’s partner in the project, state-owned utility Santee Cooper, is still looking for a buyer.
Consulting firm ICF is handling the sale, and bids are due mid-January.