SCG/D: Comparison of Rate Cut Proposals Shows Paths to Compromise

Event Driven Takeaways

  • Event Driven has analyzed the various proposals offered by South Carolina lawmakers, regulators and the merging parties to cut utility rate surcharges collected by SCANA under the Base Load Review Act, or BLRA, to offset the construction costs associated with the failed $9.5B V.C. Summer Nuclear Project.
  • Dominion Energy has made preservation of the BLRA surcharges a condition for closing its offer for SCANA. There is presently a large financial gap between its proposal and that of the South Carolina State Senate which has the legislative proposal most likely to be enacted. However, a close look at the details of the competing proposals reveals that the Senate plan could leave enough room for Dominion Energy to continue with its bid.
  • The rates set by the Senate proposal, if enacted, would expire in December, leaving the PSC to make a final decision on rates. If no legislation is enacted between now and December while the experimental rates are in place, the PSC must also set permanent rates.
  • In addition, the PSC has ordered SCANA and Dominion Energy to provide figures for a variety of rate scenarios. Event Driven’s analysis shows that one of the scenarios, which involves cutting surcharges from 18% to 9.75%, would result in an overall net cost (to Dominion Energy) associated with SCANA’s nuclear abandonment comparable to the scenario presented by its own proposal.

While the fate of South Carolina’s Base Load Review Act is critical to Dominion Energy’s bid for SCANA, there may be room for compromise given the range of proposals and potential legislative action. Event Driven has analyzed the various plans and proposals to cut the utility rate surcharges SCANA currently collects to offset the costs of its now-abandoned $9.5 billion V.C. Summer Nuclear Power Project. Although the parties remain far apart, Event Driven’s analysis suggests a variety of areas for compromise.