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SC regulators will not reconsider SCANA merger approval

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SC regulators will not reconsider SCANA merger approval

South Carolina regulators will not reconsider their decision to approve Dominion Energy Inc.'s acquisition of SCANA Corp., rejecting applications for rehearing from the state's utility watchdog and environmental groups.

The Public Service Commission of South Carolina in a Jan. 14 unanimous vote did determine that SCANA utility South Carolina Electric & Gas Co., or SCE&G, "acted imprudently" in not disclosing certain V.C. Summer nuclear expansion flaws.

As part of their merger approval in December 2018, regulators determined that SCE&G's abandonment of the more than $9 billion project was prudent based largely on the March 2017 bankruptcy of primary contractor Westinghouse Electric Co. LLC.

While there was no specific finding of imprudence related to project costs and construction prior to abandonment, regulators ultimately decided to accept a revised offer by Dominion that eliminated nuclear cost recovery after March 12, 2015. This cutoff date is based on SCE&G's failure to disclose problems with the nuclear expansion outlined in an independent assessment.

Friends of the Earth and the Sierra Club in a late December 2018 filing urged the PSC to reconsider and "reject" the joint application of a proposed business combination and the prudency determination for the scrapped nuclear reactors. The South Carolina Office of Regulatory Staff, or ORS, also urged the PSC to reconsider the decision.

"[O]ur ruling should not have been perceived as even an implicit finding of prudence on our part for capital costs incurred after March 12, 2015. Nothing could be further from the truth," PSC Vice Chairman Elliott Elam wrote in the approved directive.

Elam moved that the commission "make a clear and unequivocal finding: [SCE&G] acted imprudently by not disclosing material, and even potentially decisive, information to ORS and the Commission."

"Due to the lack of transparency – the lack of forthrightness – with regard to reports and studies available to [SCE&G], this Commission was effectively denied the opportunity to fully consider the prudency of continuing to expend resources on the project with all information available at the time," Elam wrote. "Under any definition of the term prudence, [SCE&G] was imprudent in its actions in this case with regard to costs incurred after March 12, 2015."

The finding of imprudence, however, does not change the commission's decision to approve the merger. Dominion closed the deal at the beginning of the new year.

(SC PSC dockets 2017-370-E, 2017-305-E and 2017-207-E)