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12 January 2018, 05:53 | Joann Bryant
NEWS: Dominion CEO says $14.6 billion deal will benefit SC customers
Dominion Energy ( D ) will buy Scana ( SCG ) for $7.9 billion in a stock-for-stock deal, scooping up a utility battered by a failed nuclear project that's drawn scrutiny from federal and state regulators.
In a conference call with investors, Dominion chief executive Tom Farrell said the merger will "provide substantial, immediate and ongoing relief to SCANA's electric customers".
After the closing of the merger and subject to regulatory approvals, these benefits include a $1.3 billion cash payment within 90 days upon completion of the merger to all customers, worth $1000 for the average residential electric customer. The refund amount would be based on the amount of electricity used in the 12 months prior to the merger closing, the company said.
More than $1.7 billion of nuclear assets will be taken over by Dominion "and never collected from customers, " officials said.
Scana, which owns the South Carolina Electric & Gas Co (SCE&G), has been under pressure ever since it scrapped the V.C. Summer nuclear project in July after spending about $9 billion on it with Santee Cooper.
"We will seek the approval of the Public Service Commission of SC for the immediate customer payments, rate refunds over time and other conditions related to resolution of the V.C. Summer Units 2 and 3 situation", said Farrell.
Added all up, Dominion is paying around $7.43 billion excluding debt for a company that would have cost it $14 billion last summer with a similar deal premium.
Dominion expects the deal to close in the third quarter of this year. Dominion, like SCANA, will continue to work with Santee Cooper on transferring operating licenses, Farrell said. The project accounted for about 18 percent of customer bills before the changes were announced.
Scana being the Carolina- based utility, past year had rejected to build two nuclear reactors. "We are happy to provide South Carolina Electric & Gas additional renewable resources and help an excellent corporate citizen in Solvay reduce its carbon intensity".
"Dominion is still going to have a very big uphill climb" for approval of the deal in SC, said Pourreza, who had upgraded Scana to hold from a sell on the prospect for a takeover.
He also noted that the merger offers myriad benefits to SCANA shareholders, including "the largest utility customer cash refund in history", and would "guarantee a rapidly declining impact from the V.C. Summer project".
The nuclear project's failure has cost executives of the two companies their jobs. And in late December, Santee Cooper board chairman Leighton Lord stepped down following three weeks of legal wrangling after McMaster fired him based on allegations that Lord hid critical information about the failed project.
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