SCANA Corporation announced Wednesday an agreement to merge with Dominion Energy, Inc., pending regulatory and shareholder approvals. The move makes Dominion Energy one of the nation's largest and fastest-growing energy utility companies by adding significantly to its presence in the expanding Southeast markets.
SCANA says it would would operate as a wholly owned subsidiary of Dominion Energy and would maintain its significant community presence, local management structure and the headquarters of its SCE&G utility in South Carolina.
The agreement calls for significant benefits to SCANA's South Carolina Electric & Gas Company (SCE&G) electric customers to offset previous and future costs related to the withdrawn V.C. Summer Units 2 and 3 project.
Those benefits, which will be effective following the merger, include:
- A $1.3 billion cash payment within 90 days upon completion of the merger to all customers, worth $1,000 for the average residential electric customer. Payments would vary based on the amount of electricity used in the 12 months prior to the merger closing.
- An estimated additional 5% rate reduction from current levels, equal to more than $7 a month for a typical SCE&G residential customer, resulting from a $575 million refund of amounts previously collected from customers and savings of lower federal corporate taxes under recently enacted federal tax reform.
- A more than $1.7 billion write-off of existing V.C. Summer 2 and 3 capital and regulatory assets, which would never be collected from customers to allow for the elimination of all related customer costs over 20 years instead of over the previously proposed 50-60 years.
- Completion of the $180 million purchase of natural-gas fired power station (Columbia Energy Center) at no cost to customers to fulfill generation needs.
In addition, SCANA says Dominion Energy would provide funding for $1 million a year in increased charitable contributions in SCANA's communities for at least five years, and SCANA employees would have employment protections until 2020.
The companies have agreed to combine in combine in a stock-for-stock merger in which SCANA shareholders would receive 0.6690 shares of Dominion Energy common stock for each share of SCANA common stock, the equivalent of $55.35 per share, or about $7.9 billion based on Dominion Energy's volume-weighted average stock price of the last 30 trading days ended Jan. 2, 2018. Including assumption of debt, the value of the transaction is approximately $14.6 billion.
“Dominion Energy is a strong, well-regarded company in the utility industry and its commitment to customers and communities aligns well with our values,” said Jimmy Addison, chief executive officer of SCANA. “Joining with Dominion Energy strengthens our company and provides resources that will enable us to once again focus on our core operations and best serve our customers.”
“We believe this merger will provide significant benefits to SCE&G's customers, SCANA's shareholders and the communities SCANA serves," says Thomas F. Farrell, II, chairman, president and chief executive officer of Dominion Energy. “It would lock in significant and immediate savings for SCE&G customers – including what we believe is the largest utility customer cash refund in history – and guarantee a rapidly declining impact from the V.C. Summer project.
“SCANA is a natural fit for Dominion Energy,” says Farrell. “Our current operations in the Carolinas – the Dominion Energy Carolina Gas Transmission, Dominion Energy North Carolina and the Atlantic Coast Pipeline – complement SCANA's, SCE&G's and PSNC Energy's operations. This combination can open new expansion opportunities as we seek to meet the energy needs of people and industry in the Southeast.”
“We are making progress. Under the proposed agreement between SCANA and Dominion Energy, SCE&G ratepayers will get most of the money back they paid for the nuclear reactors and will no longer face paying billions for this nuclear collapse," says South Carolina governor Henry McMaster , in reaction to the plan. "But this doesn't resolve the issue. Over seven hundred thousand electric cooperative customers face the prospect of having their power bills sky rocket for decades to pay off Santee Cooper's $4 billion in debt from this. The only way to resolve this travesty is to sell Santee Cooper. There is more work to be done, but today, we are headed in the right direction.”
Once the sale is complete, Dominion will operate in 18 states from Connecticut to California, delivering energy to approximately 6.5 million regulated customer accounts in eight states, and have an electric generating portfolio of 31,400 megawatts and 93,600 miles of electric transmission and distribution lines.
The sale is contingent upon approval of SCANA's shareholders, clearance from the U.S. Federal Trade Commission (FTC), the U.S. Department of Justice (DOJ) under the Hart-Scott-Rodino Act, and authorization of the Nuclear Regulatory Commission (NRC) and Federal Energy Regulatory Commission (FERC). SCANA and Dominion Energy also will file for review and approval from the public service commissions of South Carolina, North Carolina, and Georgia.
“We believe it is in the best interests of all parties to reach an agreement on this critical issue," says Dominion Energy's Farrell.
A special website has been established for SCANA customers and communities at brighterenergyfuture.com. Information also is available on Dominion Energy South's Facebook page or via twitter at @DominionEnergy.