Next month SCANA shareholders will vote on a proposed merger with Dominion Energy, one year to the day after SCANA and its partner Santee Cooper pulled the plug on the V.C. Summer nuclear-expansion project — a $9.4 billion loss. If shareholders approve the merger, the state’s Public Service Commission will decide whether to accept it.
Dominion has spent millions of dollars on advertising claiming a merger would be in ratepayers’ best interests. And though I do not begrudge it the opportunity to make its case, SCANA ratepayers deserve a better analysis than they’ve been given.
Dominion insists ratepayers must pay for billions of dollars borrowed by SCANA for the V.C. Summer project. They warn that if ratepayers are given relief, SCANA might file bankruptcy — creating doubt as to who would serve its customers.
A bankruptcy, however, does not mean ratepayers will not be provided with electricity. In a bankruptcy, the failed management of a company is replaced by a trustee; the trustee then discharges the obligations of the company, which continues to operate.
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I do not want SCANA to file bankruptcy. But assuming that a bankruptcy is something that must be avoided at all costs is incorrect and clouds our view of what Dominion is proposing.
It proposes that SCANA shareholders receive 22 percent more than the current market value of their stock. Ratepayers, who have already paid $2 billion of the utility’s debt, get a one-time rebate of $1,000 per customer, but are obligated to pay an 11 percent debt surcharge going forward, or an additional $4,040 in debt payments per customer.
Shareholders, who chose to invest in SCANA, receive a 22 percent premium for their stock; ratepayers, who had no choice about their energy provider, fund that premium by making debt payments for a facility that’s been abandoned.
This is unfair on its face. A bankruptcy is not desirable, but it is preferable to enslaving ratepayers to decades of debt incurred on their behalf but without their knowledge or permission.
In a bankruptcy, shareholders would get nothing until after creditors were paid. And ratepayers would have the chance to prove they’re the largest class of creditors — which in fact they would be if it were determined that SCANA sought rate increases while concealing material facts.
I think that’s likely. On average, SCE&G power bills are inflated by 18 percent to pay for the nuclear debt. But a bill passed by the General Assembly earlier this week, after finding the utility received rate increases without disclosing material facts, suggests only 3.19 percent is justified.
Dominion’s proposed $1,000 rebates are not the “windfalls” that the company’s ads portray them to be; ratepayers have a right to reimbursements for inappropriate debt assessments.
And they have a right to more substantial rate reductions than Dominion proposes. At most, they should pay a debt surcharge of 3.19 percent over time, or about $1,200 per customer — not the 11 percent and $4,040 proposed by Dominion.
Moreover, those rights would not be without a remedy; there is an ongoing relationship between ratepayers and SCANA, and if it is determined that the company owes its customers money, it could be forced by the PSC and/or the bankruptcy court to reduce ratepayers’ future bills.
The point is that, even in a bankruptcy, ratepayers would have rights and remedies. Ratepayers should contact their state representatives and senators to insist they advocate on their behalf to the PSC for a fairer deal. And to let them know that SCANA’s bankruptcy threats are empty ones.
Tom Davis is a state senator representing portions of Beaufort and Jasper counties.