Utility to buy company behind failed SC nuclear project

Utility to buy company behind failed SC nuclear project

Dominion Energy Inc. has struck a deal to buy troubled energy company Scana Corp.in an all-stock transaction valued at about $7.66 billion and absorb some of the costs of Scana's failed SC nuclear project.

"We believe this merger will provide significant benefits to SCE&G's customers, SCANA's shareholders and the communities SCANA serves", Dominion Energy President and CEO Thomas F. Harrell said in a statement.

In a presentation about the proposed merger, Dominion said that it would write off more than $1.7 billion of new nuclear development capital and regulatory assets for V.C. Summer units 2 and 3, which will not be built.

Customers would also see a 5 percent reduction as a result of refunding $575 million already collected from them, as well as savings from the reduction in the corporate tax rate, according to the release. SCE&G and its partner Santee Cooper spent $9 billion on that project before abandoning it. Including assumption of debt, the deal is valued at about $14.6 billion, the companies said in a statement.

The deal is expected to immediately add to earnings after its closure in the third quarter, Dominion said. SCANA now faces multiple lawsuits and an SEC investigation into whether it misled shareholders about the project, while Santee Cooper could be sold off to pay for the abandoned plant. The proposal would then require that a typical customer continue to pay 13% of their monthly bill for a period of 20 years, with full profits on the remaining abandoned nuclear project costs.

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SCANA provides energy in the Carolinas and Georgia. The deal would give Dominion 6.5 million regulated electric and gas customers in eight states, but is contingent on keeping a state law that allows SCANA to recoup at least some costs for the Summer plant. "There is more work to be done, but today, we are headed in the right direction".

The Dominion-SCE&G deal still must be approved by state and federal regulators.

Dominion Energy's chairman, president and CEO Thomas Farrell said that the acquisition will add to the company's presence in the southeast of the United States and cement its position as one of the largest energy companies in the country.

Farrell told analysts that he's already spoken with McMaster and other SC leaders about the deal. The two projects created approximately 200 temporary construction jobs.

SCANA's stock price has fallen about 40 percent since the nuclear project was canceled, making the company a potential takeover target. And in late December, Santee Cooper board chairman Leighton Lord stepped down following three weeks of legal wrangling after McMaster fired him based on allegations that Lord hid critical information about the failed project.

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