Dominion’s Offer to Purchase SCANA, All Flash No Substance?

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Recently we have been flooded with headlines touting Dominion Energy’s push to purchase all the stock of SCANA, the parent company of SCE&G, and strike a deal to “save” the troubled utility. But how will this work out for consumers?

First, Dominion usually promotes the fact that they are offering an immediate 5% bill discount for consumers. At first glance this may seem great, but let’s not forget that since 2008 rates have been increased by about 18% to cover the costs of the failed VC Summer nuclear plant—even with the offer of a 5% reduction, this would still leave consumers paying 13% higher rates for energy from a plant that will never produce a single watt of electricity. Furthermore, Dominion also wants to keep the Base Load Review Act in place, which is the law that made all of those bill increases over the last several years possible and is essential to maintaining the increases in the future. So after further review, perhaps the first part of the offer is not so good after all.

Maybe that’s why the second thing Dominion touts with this offer is that the “typical home will receive a check for $1000.00 after the sale goes through.” This also sounds really good, but is it actually a good deal for consumers? Let’s take a look.

SCE&G has about 662,000 ratepayers. Refunding that $1000 is going to cost Dominion $662,000,000.00. But we’re keeping the Base Load Review Act, so keep in mind that SCE&G currently collects $450,000,000 per year based on that statute. And Dominion will continue to collect some of that money since the BLRA stays around for 20 years. Again, the math says that they are giving us $662,000,000 but they get to keep charging us for the plant that will never be built and ultimately, ratepayers will pay them back about $2.2 billion over the next 20 years, due to the BLRA. When you look at it that way, it’s a pretty good deal for Dominion, but not so much for ratepayers who will payback far more than Dominion is offering upfront.

Another factor that makes the deal even sweeter for Dominion is that some of the money that Dominion has promised to give customers is the money that Toshiba had to pay SCE&G for Toshiba’s part in the plant being scrapped. The Office of Regulatory Staff (the state agency that fights rate increases) has already asked the Public Service Commission (the State agency that approves or denies rate increases) to return that Toshiba money to ratepayers. That’s 1.9 billion dollars already. So when Dominion tells South Carolina that they are returning $4 billion to ratepayers, they are actually only returning $2.1 billion above the money SCE&G ratepayers may be eligible to get anyway, based on the decision of state regulators.

Taking this all into account, you can certainly see why Dominion is so eager to buy SCANA, and willing to make flashy offers that give the impression that ratepayers would finally get the justice they are due. In the long run, however, Dominion stands to make a significant profit off the deal, at the expense of SCE&G customers who will still be paying for a failed plant that will never provide a single spark of electricity for South Carolina.

We here at SC Appleseed think one way to improve the offer—in addition to increasing the amount returned to consumers—would be for Dominion to add programs that would provide additional relief for lower and fixed income customers. This could include forgiveness of overdue balances, payment plans based on percentage of income, and/or stronger provisions to protect individuals dependent upon healthcare equipment requiring electricity. It’s also essential that any program that is developed be easily accessible and have low administrative burdens for consumers. These would be great steps that Dominion could take to truly put SCE&G customers first.

In closing, Dominion has offered a deal that is better than SCE&G offered ratepayers, but it seems clear that ratepayers can, and should, get more.