Crony capitalist energy provider SCANA saw its already decimated stock shed a whopping 9.51 percent of its remaining value on Thursday.
“A bloodbath,” one investor told us.
Indeed it was …
SCANA opened the day at $41.36 – which was already 44.6 percent below its late December 2016 peak of $74.69. By the close of trading Thursday, the stock had tumbled by nearly $4.00 per share to $37.39 – its lowest reading in more than six years.
That’s half a billion dollars in market value … gone. In one day.
SCANA’s collapse is attributable in large part to #NukeGate, a spectacularly failed command economic intervention in the energy industry.
To recap: With the enthusiastic support of state legislators and regulators, SCANA and its state-owned partner Santee Cooper spent the past decade building two next generation AP1000 pressurized nuclear water reactors in Jenkinsville, S.C. at a cost of $9.8 billion. This money was spent, but the reactors were never finished. In fact they’re not even half-finished – with the cost to complete them reportedly ranging anywhere from $9-16 billion.
Unable to pony up that kind of cash, Santee Cooper pulled the plug on the project on July 31 – killing an estimated 5,600 jobs, squandering billions of dollars in investment (including more than $2 billion raised through rate increases on consumers) and throwing the state’s energy future into chaos.
Documents released in the fall revealed executives at the two utilities knew over a year-and-a-half ago that the project was doomed – yet continued to raise rates on consumers anyway. In fact, ratepayers are still shelling out an estimated $37 million per month on these reactors.
These rate increases were authorized by the controversial “Base Load Review Act,” a piece of constitutionally dubious special interest legislation advanced by liberal “Republicans” – and then allowed to become law by former governor Mark Sanford.
Not surprisingly, many of the politicians who supported this special interest legislation are now running for their lives.
#NukeGate has also prompted a flood of lawsuits and a rapidly escalating, multi-jurisdictional criminal probe.
In late October the company’s former CEO Kevin Marsh was forced out – a move the company reportedly tried (and failed) to use as leverage with state lawmakers.
SCANA still holds some cards, though.
If lawmakers or state regulators (who were conflicted/ asleep at the wheel throughout this fiasco) attempt to aggressively claw back the money they previously guaranteed to SCANA and Santee Cooper, they could face a very uncertain legal future.
“There is a very high likelihood a stay would be granted and SCANA will prevail in court, which means the company could walk away from its settlement offer, which (is) more generous than many understand,” one financial analyst told us.
Really? We didn’t find it generous …
Anyway, assuming SCANA were to prevail in court it could conceivably “get all the money from ratepayers that the (Base Load Review Act) entitles them to claim.”
“That outcome would be a huge loss for ratepayers,” the analyst added. “If, however, the General Assembly works with SCANA they could potentially win the offer already on the table plus another several hundred million in relief over the next decade.”
Will that happen? It’s not looking that way …
According to our analyst, “hardliners in the General Assembly are in a race to out-outrage one another, and the likelihood of a reasonable settlement that gets ratepayers substantial relief is diminishing.”
That’s too bad … although we see no outcome in this scenario that makes ratepayers (or taxpayers) whole.
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