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Sources: New Dominion Deal “Dead”

Alternative proposal shot down by state regulator …

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An alternative proposal from Virginia-based Dominion Energy to purchase embattled South Carolina crony capitalist utility SCANA is dead, multiple sources familiar with the status of negotiations tell this news site.

According to our sources, negotiations on the new deal – dubbed “Dominion 2.0” – were shut down this week by Nannette Edwards, executive director of the S.C. Office of Regulatory Staff (ORS).  Driving Edwards’ decision?  Alleged pressure from two sources: S.C. Senate majority leader Shane Massey, an ardent opponent of Dominion, and Mike Couick, a staunch ally of GOP governor Henry McMaster and leader of a corrupt state network of electric cooperatives.

Why would they want to sink the deal?

Good question … although Massey’s ongoing meddling in this saga is hardly surprising.

As we noted earlier this month, the legislative leader has come under increased scrutiny of late for his vociferous, reflexive opposition to the Dominion deal – which many attribute to his publicly declared involvement in an attempted corporate coup at SCANA.  Others are speculating as to whether Massey (or his consultants) are working for another power company with designs on the beleaguered West Columbia, S.C.-based firm.

If the Dominion deal is scuttled, another company might move in and try to take its place at the negotiating table …

(Click to view)

(Via Travis Bell Photography)

Massey (above) is the politician who singlehandedly torpedoed a compromise proposal between Dominion and state lawmakers in late June.

That plan would have provided an estimated $1.6 billion in immediate cash rebates to SCANA customers (an average of $1,500 per residential ratepayer) while gradually reducing energy bills over the next twenty years.  It would have also resulted in Dominion absorbing $1.7 billion in debt related to the botched V.C. Summer nuclear generating station expansion project in Jenkinsville, S.C.  This abandoned facility is ground zero for #NukeGate, state government’s spectacularly failed intervention in the nuclear power business.

Not surprisingly, Dominion’s original deal has been a popular plan with ratepayers – particularly due to the up-front relief contained therein.

Massey killed that agreement, though.

With the Aiken, S.C. Republican dictating terms in conference committee negotiations, lawmakers ditched the compromise proposal and instead rolled out an alternative agreement which contained $270 million in up-front relief to ratepayers and larger reductions in energy bills over time (at least temporarily).  As this news outlet exclusively reported earlier this year, though, all of the initial ratepayer relief provided by the legislature was also envisioned as part of the original Dominion-SCANA deal.  That means South Carolina politicians – who got the state into this mess in the first place – haven’t given beleaguered ratepayers anything they wouldn’t have gotten out of the private sector deal.

(Click to view)

(Via: High Flyer)

Also – unlike the Dominion deal – the legislative proposal failed to lock in lower rates in perpetuity.  It left that authority to the same regulators who raised rates to begin with.  Furthermore, the legislative proposal has set up a protracted legal battle – one that the state may not be able to win.

Last week, though, another court case made waves … forcing Dominion and the state back to the negotiating table.

A class action lawsuit filed against SCANA in state court appears poised to result in a judge striking down the now-notorious Base Load Review Act (BLRA) – which is the mechanism lawmakers used a decade ago to essentially socialize $2 billion of the investment risk associated with the failed nuclear power project.  Billions more were socialized via rate increases and debt incurred by government-run power provider Santee Cooper, which is staring down all sorts of bad news related to its role in this scandal.

In fact multiple investigations are underway in the light of revelations that SCANA, Santee Cooper and various government “oversight” agencies knew years ago the reactors were doomed – yet continued proposing/ approving rate increases anyway.

S.C. circuit court judge John C. Hayes III is expected to issue his ruling early next week – an announcement which sent SCANA’s stock tanking.

The developments also prompted Dominion to put forward an alternative agreement as members of the S.C. Public Service Commission (SCPSC) mull their proposed purchase of SCANA – the last remaining hurdle the deal must clear.

According to reporter Avery Wilks of The (Columbia, S.C.) State newspaper, the new deal would have offered deeper up-front cuts to ratepayers – an estimated $20 per month instead of $10 per month – and pumped more money into reducing SCANA’s nuclear debt.   There is a catch, though.  The new offer would not have included the $1.3 billion in remaining up-front rebates (an average of $1,000 per residential ratepayer) left on the table following the legislative compromise in June.

Frankly we are shocked Dominion would have proposed anything (formally or informally) which removed up-front ratepayer relief from the equation.   This, after all, has been the primary selling point of its plan.

The company’s spokesman indicated its alternative plan was intended to give regulators “another option to consider,” but the presentation of such a proposal strikes us as unnecessarily muddying the waters.

Curiously, the Dominion spokesman also told The State that the company’s recent public relations push on its original deal had provided the company with feedback suggesting its original deal – which the company says it still “prefers” – was in need of modification.

“In meetings that we had been having, we came to the realization that there are quite a few stakeholders in the process who would rather have lower rates in lieu of cash payments,” he said.

That strikes us as difficult to believe …

Nonetheless, it doesn’t matter now because the alternative proposal – like the legislative compromise in June – has been rejected.

And of course Massey dove in with both feet again this time, calling the alternative deal “a brazen and deliberate attempt” on the part of Dominion to “pressure the judge” in the class action case.

“Why tell (SCPSC) that a potential ruling in an unrelated judicial proceeding, expected well before (the agency) rules, will kill (the) deal unless you want the judge to see the threat?” Massey tweeted.

As we noted in our lede, Massey wasn’t the only driver of the decision to kill the alternative Dominion deal.  The involvement of Couick is very interesting to consider, especially as it relates to state lawmakers’ belated efforts to sell Santee Cooper.  According to our sources, Couick – a fierce advocate for continued state ownership of this asset – believes queering the Dominion deal will help him keep the jackals at bay when it comes to the imperiled government-run utility.

“There is a pivot play here to watch for,” one electric cooperative insider told us this week. “He is taking pieces off the board.”

This news outlet has not endorsed any of the proposals related to resolving #NukeGate.  We continue to believe a better deal is out there – one that maximizes the amount of relief available to ratepayers within the confines of what the market will bear and the courts will accept.  Most importantly, though, we believe this ongoing saga continues to serve as a painful reminder of what happens when politicians try to run a power company – or try to manipulate financing for a major utility project via a “public-private partnership.”

Legislative meddling has been an unmitigated disaster … which is why we have repeatedly called on Palmetto politicians to stand down and allow the private sector to extricate the state from this debacle as much as possible.

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