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SCANA / Dominion Merger Approved. What’s Next? Debt

From Scott Carlberg

The South Carolina Public Service Commission approved the merger between SCANA and Dominion Energy December 14. That move, “All but guarantees that Dominion Energy will take over SCANA and electric and gas businesses in South Carolina, North Carolina and Georgia,” said financial publication Market Screener after the decision.

Nuclear debt is not decided in the PSC decision, though. It is one step along the path to answer to the nuclear debt. Still a big issue out there for consumers.

Here’s our take on the meeting.

This is one phase of the ongoing electric energy debates that is at an end. PSC Chair Randall reflected in his final comments about the constant need for transparency in these matters. Energy Consumers of the Carolinas has written about that in the past. Transparency, as we said, is the new objectivity.

The PSC noted that whatever it decides, there will be people happy and unhappy with its call. Without question, the PSC faced a complex decision and handled it. One basis for its decision was for the “greater good,” one basis for for a public commission like this.

Nanette Edwards, the Office of Regulatory Staff (ORS) executive director, commended the PSC for tackling a challenging decision, too. She believes the average residential customer will not see a monthly cost increase from the merger. The ORS represents the public interest in utility regulation for the major utility industries before the PSC, courts, General Assembly, and federal regulatory bodies. The actual rates are set after the PSC issues its merger order when Dominion must file tariff sheets.

“Certainty” was another bar set by the commissioners. The PSC’s decision followed a long time of uncertainty in many areas of business and for consumers. Not the least of this has been who will have to account for the debt in the nuclear project. The decision today does not completely answer that issue, but is one step to get to such as decision.

The PSC noted economic development and growth in its decision to approve the merger. How South Carolina appears as a place to do business — well managed and a place with a stable economic environment — is important for the long term. For everyone in the state.

The PSC noted that it has been tough to make a decision that sacrifices a company that had so long been a star in state business universe. They noted, though, that the decision, as much as they would like to keep an independent power company in South Carolina, is essentially out of their hands from a pragmatic standpoint. The PSC had to make the call for consumers versus state pride.

Next steps: 

First, the actual order approving the merger from the PSC has to be written and reviewed by the commissioners. Dominion has to weigh in on the final order. “Dominion Energy is encouraged by the Commission’s vote and awaits an order to review prior to making a final decision to close the merger with SCANA,” said the CEO of Dominion. (Source)

Second, equally important, though quite different, is the possible sale of Santee Cooper. A risk is that policymakers or consumers equate the SCANA merger and a possible Santee Cooper sale. Each has to be analyzed with its own unique stakeholders and needs. The lessons of SCANA/Dominion are not transferable to Santee Cooper.

Third, and most important to consumers is the nuclear debt. The gravity of the situation is significant. Nuclear debt that customers of both entities will have to pay must be resolved.

The drama that has been the electric industry has taken an important step with the merger approval, but there is more of the story to write, including how to set a course best for consumers with Santee Cooper, and most critically, making a call on nuclear debt.

Consumers are watching.

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ECC wrote about debt recently, in this column, Santee Cooper Debt – Clean the Slate.