Dominion Energy to Buy Scana in $7.66 Billion Deal--4th Update

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The agreement also calls for significant benefits to Scana's South Carolina Electric & Gas Company subsidiary or SCE&G electric customers to offset previous and future costs related to the withdrawn V.C. Summer Units 2 and 3 project.

Benefits include a $1.3 billion cash payment within 90 days of the deal closing, equal to about $1,000 for the average residential electric customer.

The companies said South Carolina Electric & Gas Co. residential customers will get a 5% rate reduction, equal to about $7 a month for the typical customer, compared with the 3.5% reduction proposed to appease regulators and frustrated customers past year. The company would deliver energy to approximately 6.5 million regulated customer accounts in eight states and have an electric generating portfolio of 31,400 megawatts and 93,600 miles of electric transmission and distribution lines. Further, the company would pay out $1.3 billion to consumers (or about $1,000 for the average residential customer), while also reducing rates by about 5%, saving the average customer $7 per month.

SCANA's South Carolina Electric & Gas was a majority partner with state-owned Santee Cooper in a project to bring two new nuclear reactors online at the existing V.C. Summer nuclear plant in Jenkinsville. But cost overruns, construction delays and the bankruptcy of the project's lead contractor led them to abandon the expansion last July. Dominion also will assume SCANA's debt, making the deal worth a total of $14.6 billion.

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Dominion expects the deal to close in the third quarter of this year. 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. S.C. House Majority Leader Gary Simrill of Rock Hill told the paper that the House won't change its plans to consider legislation, including taking away the utility's right to keep charging customers for the nuclear project. SC regulators and politicians, on the hot seat for the nuclear debacle, will have a hard time saying "no" to white knight Dominion as it waves $1,000 checks. "Having certainty on this issue can act as a catalyst for economic development and it is essential for the Dominion Energy-SCANA merger to move forward".

Farrell also lauded the combined company's potential, noting that SCANA is a "natural fit" for Dominion.

The South Carolina plant and a similar project being built in Georgia represented a next wave of nuclear construction in the US, using a new Westinghouse reactor design that was meant to curb the cost overruns that had plagued prior nuclear projects.

Farrell told analysts that he's already spoken with McMaster and other SC leaders about the deal. 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.