A majority of S.C. senators voted Wednesday in favor of a bill that would temporarily cut S.C. Electric & Gas customers’ rates by 13%, further complicating a proposed merger between SCE&G parent company SCANA and Virginia-based Dominion Energy.
Currently, 18% of SCE&G ratepayers’ bills go toward funding the abandoned V.C. Summer nuclear project, into which SCE&G and co-owner Santee Cooper poured $9 billion before rising costs and mounting delays led to its abandonment in July. In March, the Senate commissioned a study from economic consultant Bates White that showed SCE&G could withstand a 13% cut in those rates.
The amended bill must be passed by the House and then signed by Gov. Henry McMaster. House members have said they want an 18% cut, and McMaster has promised to veto any bill that doesn’t return all money paid by SCE&G customers toward V.C. Summer-related costs.
“If we adopt the Senate version of this bill, it will go nowhere,” Sen. Brad Hutto, D-Orangeburg, said during a Senate hearing on Wednesday. “By doing this, we are putting our finger on the scale, not knowing which way it tips the balance.”
Dominion has said that the proposed $14.6 billion merger hinges on it being allowed to recoup costs of the V.C. Summer project from ratepayers, under a plan that would shorten the period of customer liability and refund ratepayers some of their money. The merger would refund ratepayers an average of $1,000 and a rate decrease of around 7%, according to a Dominion news release.
Last month, Dominion president and CEO Tom Farrell said that legislative intervention in utility rates “materially changes the grounds for Dominion Energy’s proposal.” In a statement Wednesday, the company said: “If the Senate bill becomes law, we stand by the previous statement of our chairman that this would be a material event that could eliminate all of these benefits.”
The bill also prohibits the Public Service Commission from holding a hearing on restructuring or repealing the Base Load Review Act before Nov. 1 but requires a final order from the state’s utility commission by Dec. 21. Under the BLRA, a law passed in 2007, SCANA requested and received nine rate increases related to V.C. Summer construction costs.
“(The bill) ensures that state regulators have the time to rule on the merger,” Sen. Shane Massey, R-Edgefield and co-chair of the Senate’s V.C. Summer Nuclear Project Review Committee, told the Columbia Regional Business Report on Thursday. “Second, ratepayers wouldn’t have to pay the nuclear costs while the decision is being made. We’re not done. We will have to work with the House to find common ground, but this is big enough and affects enough people that we will find a way to get it done.”
A Senate vote in February delayed a decision on necessary PSC approval of the Dominion merger until December — a timetable Farrell called unworkable.
Senators backed the delay of a PSC decision on the merger by a 35-0 vote in part to buy time to investigate the possibility of a better deal. Hutto said Wednesday that he has talked with representatives from Florida-based utility NextEra about a potential bid but was told that the company — rumored to be a potential suitor for state utility Santee Cooper — would be unable to beat Dominion’s offer.
Study forecasts $18.7B economic impact
On Tuesday, Dominion released a study it had commissioned that found its potential merger with SCANA could have an $18.7 billion economic impact on South Carolina. Joseph Von Nessen, a research economist in the Darla Moore School of Business at the University of South Carolina, performed the study.
Von Nessen said refunds and reduced rates would equal more money in the pockets of South Carolinians, who will spend it in the local economy.
“The majority will stay in the state locally with businesses in South Carolina, which will increase the overall demand of goods and services,” Von Nessen said. “That creates an uptick in economic activity, which results in more jobs and income.”
Von Nessen estimated that $1.49 would be generated in economic activity for every $1 in savings that the deal would provide to SCE&G customers.
“This means for each $100 that is saved by customers, $149 in total economic activity will be generated in South Carolina,” he said.
The study broke down the potential economic impact of a Dominion deal by county, based on the number of customers and electricity usage. Charleston would see $4.9 billion in added economic output, most in the state; Richland County would see $4.2 billion and Lexington County would see $2.6 billion.
“The intent of the study is to help ratepayers, stockholders and legislators make informed decisions,” Von Nessen said. “The study is neither an endorsement nor repudiation of the merger.”
The six-week study compared SCE&G ratepayer costs under the Dominion merger with costs if no rate cuts are made. It did not factor in a plan, proposed by SCE&G in November, to cut rates by 3.5%.
Opponents voice concerns
Groups opposing the Dominion deal expressed concerns at the Statehouse on Tuesday. Members of the S.C. chapter of the Sierra Club and Friends of the Earth joined representatives from Virginia, where Dominion has come under recent scrutiny.
Tom Clements, senior adviser for Friends of the Earth, criticized House and Senate committees investigating the V.C. Summer debacle for not soliciting all viewpoints on Dominion and for not conducting a deep examination on how the company operates.
Virginia resident Tom Hadwin, who has worked for gas and electric utilities in Michigan and New York, said Dominion and SCANA both prioritize profits and have too much influence on state legislation.
“SCANA and Dominion are unregulated holding companies that own regulated utilities,” he said. “They are like every other Fortune 500 company. The balance between customer and shareholder has gotten out of whack partly because the companies can manage the legislative process.”
Glen Besa, former director of the Virginia Sierra Club, said Dominion has a heavy hand in utility legislation in that state. Dominion won a rate freeze there in 2015, and Virginia’s State Corporation Commission has charged that Dominion collected $426 million more from customers in 2016 than it should have.
“You can’t take Dominion at face value,” Besa said. “Urge your legislators to apply deep scrutiny.”
When asked about Von Nessen’s report, Clements said he had not read it and had no comment. Besa also had not read the report.
“They have hired economists, but common sense says if you’re taking billions of dollars out of the pockets of ratepayers to benefit one company, what does that do for your economy?” Besa said.