Virginia-based Dominion Energy wants to manage South Carolina’s largest public power agency in a way that protects the state-owned utility’s tax-exempt status, a letter sent to South Carolina state officials said.
In a
Farrell also criticized Santee Cooper’s “11th-hour suggestion” that the South Carolina Public Service Commission agree to carve out $351 million for the public power agency when it considers the proposed merger between Dominion and SCANA’s South Carolina Electric & Gas, the majority owner in South Carolina’s failed twin nuclear reactor project.
The PSC began hearings on the merger Thursday. There are 19 intervenors in the case, including Santee Cooper. The hearings will also decide if the utilities can continue to charge SCE&G customers for future costs related to the abandoned reactors at the V.C. Summer plant.
As part of the merger agreement, the two companies have offered plans to reduce rates, including one that would provide a cash rebate.
Santee Cooper said in a
SCE&G and Santee Cooper spent about $9 billion on the reactors by before they pulled the plug on the project last year.
Farrell said Santee Cooper's request of the PSC is “legally and procedurally improper,” and that it will be addressed during the merger hearings.
“I would further note that such relief request, even if it could be granted by the commission, would be self-defeating in that it would prevent the business combination between SCANA and Dominion Energy from occurring,” Farrell said.
Farrell's letter praises Santee Cooper as an excellent company, and said the management proposal would be offered outside the PSC proceedings. He also said the offer is contingent upon the merger being approved.
Santee Cooper, formally the South Carolina Public Service Authority, has spent $4.7 billion on the non-producing nuclear asset, most of it in debt that won’t be paid off for years.
Mollie Gore, Santee Cooper’s spokeswoman, called Dominion’s offer “a very high-level idea.”
“There is a legislative review committee looking at Santee Cooper, and we would expect them to consider several different scenarios as part of that review,” she said, adding that the utility is cooperating with the committee.
Dominion’s management proposal would be better than selling Santee Cooper, according to Farrell’s letter.
“We believe that this arrangement would maintain the advantageous tax-exempt status of Santee Cooper while creating value for all stakeholders without requiring any bailout or tax abatements from the state of its taxpayers,” Farrell said.
As a result of cost advantages through the management structure, he said “any attempt by an investor-owned utility or private holding company to purchase or take over Santee Cooper would in our view only result in higher rates for Santee Cooper’s electric customers.”
State lawmakers created the Public Service Authority Evaluation and Recommendation Committee earlier this year are considering whether to sell Santee Cooper in the wake of the nuclear debacle, including its sale.
On Oct. 17, the committee heard a presentation from Virginia-based ICF International, a management consulting firm that analyzes and solicits restructuring proposals. The firm also worked for the South Carolina General Assembly earlier this year during extensive hearings on the nuclear fiasco.
Over the next three and a half months, ICF will analyze and solicit non-binding indicative bids for the committee to study.
ICF said its evaluation of bids should be completed by Feb. 1. The committee will make a recommendation about selling Santee Cooper, but the final decision rests with the Legislature.
