Arrington skeptical about SCANA/Dominion merger deal

Arrington skeptical about SCANA/Dominion merger deal
February 10 16:38 2018 Print This Article

State Representative Katie Arrington (R-Summerville) told the gathering at the Lowcountry Conservative Breakfast Club at Kelly’s Barbecue Saturday that she opposes the proposed merger of SCANA with Virginia-based Dominion Energy if the utility giant wants to pass on costs from the failed nuclear reactor project in Jenkinsville, a town about 20 miles north of Columbia, to its 700,000 customers.  SCANA is adding about 18% to its monthly bills to cover the costs for the abandoned project to its rate-payers.  The added costs were allowed under the 2007 Base Load Review Act (BLRA) to encourage investment in nuclear reactors.

Arrington is challenging U.S. Representative Mark Sanford in a June 12 primary, but she did not discuss her Congressional campaign.  She wanted to inform the club about what went wrong with the reactor project and measures underway to prevent further charges to SCE&G electrical customers.  The South Carolina House passed a bill (H-4375) on February 1 to prevent further charges to the customers of for-profit utilities for nuclear reactors under construction.  It has been referred to the Senate Judiciary Committee, chaired by Senator Luke Rankin (R-Myrtle Beach).  No Senate hearings have taken place to date.

Many other states passed similar legislation to the BLRA based on guidance from the George W. Bush Department of Energy, warning of an impending energy crisis.  SCANA was a 55% partner on the project along with state-owned utility Santee-Cooper.  Arrington said that lead contractor Westinghouse never had its plans reviewed by licensed nuclear engineers and that the project was marred by numerous logistical problems.  The project to construct two nuclear reactors on the site was initially estimated to cost $11 Billion but was revised upward to $20.7 Billion by 2016.  Arrington says that SCANA never revealed the cost over-runs and delays to regulators or shareholders.

The billions of dollars billed to rate-payers boosted the value of SCANA stock shares from about $28 per share in 2007 to nearly $80 per share at its 2016 peak.  There is a close correlation between the additional billing and dividends paid to investors.  Arrington said that there is no reason for SCANA to declare bankruptcy, even with its large debt from the failed reactor project.  She added that many contractors at the Jenkinsville site have not been paid and that nearby school districts added staffing to accommodate the children of the nearly 6000 workers at the site who have been displaced.

The Dominion merger deal calls for $1000 rebate checks to go out to rate-payers but that additional billing to pay off SCANA debt would continue for 20 years.  Arrington noted that the term “rate-payer” was not defined in the agreement.  Dominion executives have said that eliminating the additional billing would be a “deal-breaker.”  Several SCE&G employees attended the breakfast and suggested that they would lose their jobs if H-4375 became law.  The merger agreement calls for existing SCE&G employees to be protected until 2020.  Dominion currently serves about 6 million electric customers in 17 states.

Arrington wants to see a free-market approach to energy, including less restrictions on solar power and allowing customers to select their utility provider.  Some form of consumer choice currently exists in 29 states.  She also supports offshore drilling for natural gas, a measure which garnered 71% approval statewide in a 2015 survey.  Arrington believes that seismic testing will reveal reservoirs of natural gas about 50 miles off the coast of Georgetown and that leasing fees to the state could be used to reduce the tax burden on South Carolina residents.