Embattled crony capitalist energy provider SCANA will delay a decision on the payment of stock dividends for the second quarter of 2018.
According to a news release from the Cayce, S.C.-based company issued on Wednesday morning, its board of directors “will take additional time before making a decision on the payment of a dividend on the company’s common stock for the quarter ending June 30, 2018.”
SCANA had previously planned to pay second quarter dividends to its shareholders (as of June 11, 2018) on July 1, 2018.
“These dates no longer apply,” the company’s news release stated.
This is the second major announcement from SCANA in as many days. On Tuesday, the firm announced it was holding a special meeting of its shareholders to vote on a proposed merger with Virginia-based Dominion Energy. That vote is scheduled for July 31, the one-year anniversary of #NukeGate – a spectacularly failed government intervention in the energy industry.
#NukeGate has been dominating headlines in South Carolina for the past ten months … and with good reason.
It is arguably the biggest command economic disaster in the Palmetto State’s history, one with no clear resolution in sight.[timed-content-server show=’2018-Jan-17 00:00:00′ hide=’2018-Jun-18 00:00:00′]
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To recap: Along with government-run utility Santee Cooper, SCANA spent ten years building (or rather not building) two next generation nuclear reactors at the V.C. Summer nuclear power station in Fairfield County, S.C. Announced in 2007, the reactors were supposed to have been operational in 2017 at a cost of $9.8 billion.
The money was spent, but the reactors simply weren’t completed … and the utilities couldn’t afford the $10-16 billion price tag required to finish them. Last July, Santee Cooper pulled the plug on the project – killing an estimated 5,600 jobs and throwing the state’s energy and economic future into chaos. The state-owned utility’s decision – announced just eight days after it proposed new rate hikes to fund the project – prompted a flood of lawsuits, criminal investigations and full-court press by lawmakers to try and undo the damage they did (or at least give that impression to voters).
Of course ten months later lawmakers have yet to take concrete action – and the temporary “solutions” they have proposed could wind up doing more harm than good.
Lawmakers are on the hook for this hole in the ground because they allowed SCANA and Santee Cooper to socialize more than $2 billion (and counting) of its investment risk via the now notorious Base Load Review Act (BLRA). This legislation – approved by liberal state lawmakers and allowed to become law in 2007 by former governor Mark Sanford – paved the way for the utilities to impose an eighteen percent “nuclear surcharge” on ratepayers, a charge they are still paying.
Various legislative proposals have been introduced to lower or eliminate this surcharge – temporarily – but lawmakers are clearly worried that scrapping the BLRA entirely will invite a protracted legal battle (one the state would likely lose).
Furthermore, scrapping the BLRA entirely would kill the Dominion deal SCANA shareholders are now set to vote on.
Under the terms of the Dominion proposal, the nuclear surcharge would be lowered from 18 to 11 percent over the next seven years and from 11 percent to zero over the following 12 years. Of course Dominion’s offer includes something else – $1.3 billion in upfront relief to ratepayers.
That’s roughly $1,000 in upfront cash to each SCANA customer.
Until last week, no legislative proposal offered any up front relief. The latest proposal from the S.C. House of Representatives offers $300 million in relief, although it’s not immediately clear whether negotiators from the S.C. Senate will approve. Even if they do, it’s not clear whether the plan would survive a legal challenge.
While a sale of SCANA remains a distinct possibility, Santee Cooper has seen its future prospects grow dimmer.
Despite months of wrangling, South Carolina governor Henry McMaster remains unable to find a viable suitor for the state-owned utility – which he was hoping to unload in a fire sale ahead of his June 12 GOP primary election. One good reason for that? The utility’s increasingly precarious fiscal position – including a likely downgrade of its debt (news of which broke exclusively on this site earlier this month).
In fact, the only pseudo-offer floated for Santee Cooper involved a massive taxpayer bailout of the antiquated bureaucracy.
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