Regulators approve Dominion’s buyout of SCANA: What it means
SCE&G customers will not foot the bill for more than $112 million in questionable spending on the utility’s failed V.C. Summer nuclear construction project, after a written ruling issued Friday by the the S.C. Public Service Commission.
That $112 million includes:
▪ The $1.8 million SCE&G paid to the utility’s former chief executive, William Timmerman, for consulting on the nuclear project. When questioned by the state’s utility watchdog, SCE&G could produce no evidence Timmerman did any work during the five-year contract.
▪ The $550,000 SCE&G that paid the San Francisco-based Bechtel Corp., the firm that assessed the V.C. Summer project in fall 2015 and concluded it was in danger of failing. SCE&G and Santee Cooper kept Bechtel’s written report secret from regulators and the public until Gov. Henry McMaster forced its release in September 2017, more than a month after the project collapsed.
▪ The $110 million trust the utility set aside to pay hefty severance packages to senior executives of SCE&G and its embattled parent company, SCANA, if they lose their jobs during an impending takeover by Virginia-based Dominion Energy.
In addition to that, SCE&G customers also won’t be charged for the millions of dollars in bonuses that SCANA executives were paid for their work leading the failing nuclear project.
SCANA executives received almost $21.4 million in bonuses over the life of the decade-long nuclear project. But it is unclear exactly how much of that money was tied directly to V.C. Summer. Also, about $9 million of those bonuses was paid for by the project’s state-owned minority partner, Santee Cooper, not SCE&G ratepayers.
Dominion now must foot the bill for those costs as part of its planned multi-billion-dollar acquisition of SCANA. Dominion offered to pay the costs as part of the buyout but will say little about whether the expenses were legitimate.
“These payments were thoroughly discussed at the evidentiary hearings (last month at the PSC) and, based on commissioner questions and concerns expressed, we felt the best resolution of concerns related to these items was to agree to remove them from (SCE&G customers’) rate base and forgo recovery,” Dominion spokesman Ryan Frazier told The State in an email.
The PSC’s written ruling, ensuring those costs can’t be passed down to customers, follows November’s weeks-long hearing into the failed nuclear project, SCE&G’s future electric rates and Dominion’s bid to buy SCANA.
During that hearing, environmentalists, customer groups and the state’s utility watchdog — the Office of Regulatory Staff — fought to block SCE&G or Dominion from charging ratepayers to cover a number of controversial nuclear expenses.
“Trying to limit the harm endured by ratepayers in this case, of which there is a lot, is something ORS has tried to do at every opportunity we’ve identified, large or small,” Regulatory Staff spokesman Ron Aiken said Friday. “Those examples are cases where we discovered costs … that were onerous, egregious or both.”
Regulatory Staff and the 18 other groups involved in last month’s PSC hearing can appeal the PSC’s written ruling to the commission itself or the state Supreme Court. But they likely won’t make a decision about whether to appeal until after Christmas.
The money is small potatoes in the grand scheme of SCANA’s sale.
SCE&G’s nearly 730,000 electric customers have paid more than $2 billion in higher power bills for the nuclear project. And if Dominion closes on its deal to buy SCANA, those customers will pay another $2.3 billion for the unfinished twin reactors over the next 20 years.
But eliminating the questionable charges still is important to customers, said Lynn Teague, who represents the S.C. League of Women Voters.
“To ratepayers, (those charges) symbolize the arrogance with which the company has run its affairs,” said Teague, one of 19 parties involved in the PSC case.
Friday’s PSC order also stipulates SCE&G customers will not be charged for Dominion or SCANA’s legal fees related to the nuclear project or the buyout.
That includes the cost of defending SCANA in civil lawsuits and criminal investigations concerning the project’s failure. It also includes any expenses, such as advertising or investment banks, the two companies incurred to complete the buyout.