South Carolina lawmakers are not backing down from efforts to implement an immediate rate reduction for South Carolina Electric & Gas Co. ratepayers even if it dooms the utility's sale to Dominion Energy Inc.
The South Carolina Senate in an initial vote late March 28 approved an order for state regulators to implement new rates for SCE&G effective April 1 that significantly reduce cost recovery for the abandoned V.C. Summer nuclear expansion. The order amounts to a 13% interim reduction in rates as supported in a recent analysis from economic consulting firm Bates White, according to local media reports.
The Senate on March 29 delayed holding a final vote on the legislation, S.B. 954, which needs to be approved by the South Carolina House of Representatives and signed by the governor. The final vote might not happen until April 10.
This rate reduction would be in place until the Public Service Commission of South Carolina rules on petitions for rate relief and a customer benefits package pitched by Dominion Energy in its offer to buy SCE&G parent SCANA Corp.
Dominion Energy Chairman, President and CEO Thomas Farrell II said March 28 that if the bill becomes law, it "materially changes the grounds" for the company's proposal. These changes could cause the company to walk away from the deal table.
Dominion Energy announced Jan. 3 that it agreed to acquire SCANA in a stock-for-stock deal proposed as a lifeline to the South Carolina company and its ratepayers after the abandonment of the more than $9 billion nuclear expansion. Dominion's offer includes $1.3 billion of cash payments to all SCE&G electric customers within 90 days after closing and an additional rate reduction of about 7% to offset previous and future costs tied to V.C. Summer.
The merger agreement states SCE&G must be allowed to include $3.3 billion tied to nuclear investment in retail rates during a 20-year amortization period.
Farrell has warned lawmakers and regulators that efforts to strip cost recovery tied to V.C. Summer would be "insurmountable" and threaten the merger agreement.
Still, the South Carolina House of Representatives has twice passed legislation that eliminates all cost recovery through an 18% rate reduction that would add up to about $445 million a year for SCE&G.
Rep. Peter McCoy, chairman of the House Utility Ratepayer Protection Committee, signaled he is not surprised or overly concerned by Dominion's warnings.
"Of course they are trying to flex [their muscles] now," McCoy tweeted March 29. "They are realizing that SCANA doesn't have to merge to survive."