Dominion Energy increases holdings with US$14.6 billion SCANA Corp. merger

Virginia-based utility, Dominion Energy, which also operates conventional and pumped storage hydropower schemes, has reached an agreement with SCANA Corp. for the two companies to merge in a transaction worth about US$14.6 billion.

SCANA, headquartered in Cayce, S.C., will operate as a wholly owned subsidiary of Dominion Energy after the closing of the merger and regulatory approvals.

According to Dominion’s Jan. 3 announcement, the agreement says the companies will combine in a stock-for-stock merger. SCANA shareholders would receive 0.6690 shares of Dominion Energy common stock for each share of SCANA common stock, the equivalent of $55.35 per share, or about $7.9 billion based on Dominion Energy’s volume-weighted average stock price of the last 30 trading days ended Jan. 2.

In addition to its portfolio of nuclear and fossil fuel, solar, wind and conventional hydro generation plants, Dominion Energy also operates pumped storage hydro including the 3,003-MW Bath County facility in Virginia, the largest of its kind, by capacity, in the world.

According to Dominion Energy, the combination with SCANA would solidify Dominion Energy’s position among the nation’s largest and fastest-growing energy utility companies by adding significantly to its presence in the expanding Southeast markets.

In addition to growth via the SCANA acquisition, HydroWorld.com reported in September that Dominion Energy began conducting in-depth studies of two potential sites for a pumped storage hydropower facility at a 4,100-acre site in Tazewell County and an abandoned mine in Wise County. Earlier in the month, Dominion Energy filed an application for a preliminary permit with the Federal Energy Regulatory Commission for the Tazewell location.

SCANA’s operations include service to about 1.6 million electric and natural gas residential and business accounts in South Carolina and North Carolina and 5,800 MW of electric generation capacity.

One of SCANA’s subsidiaries, South Carolina Electric & Gas Co. (SCE&G), would see its electric customers receive cash payments and lower rates related to the cancelled Virgil C. Summer Nuclear Generating Station project.

The proposed actions include:

  • A $1.3 billion cash payment within 90 days upon completion of the merger to all customers, worth $1,000 for the average residential electric customer. Payments would vary based on the amount of electricity used in the 12 months prior to the merger closing; 
  • An estimated additional 5% rate reduction from current levels, equal to more than $7 a month for a typical SCE&G residential customer, resulting from a $575 million refund of amounts previously collected from customers and savings of lower federal corporate taxes under recently enacted federal tax reform; 
  • A more than $1.7 billion write-off of existing V.C. Summer 2 and 3 capital and regulatory assets, which would never be collected from customers. This allows for the elimination of all related customer costs over 20 years instead of over the previously proposed 50-60 years; and 
  • Completion of the $180 million purchase of natural-gas fired power station (Columbia Energy Center) at no cost to customers to fulfill generation needs.

The transaction would be accretive to Dominion Energy’s earnings upon closing, which is expected in 2018 upon receipt of regulatory and shareholder approvals, according to the company. The merger also would increase Dominion Energy’s compounded annual earnings-per-share target growth rate through 2020 to 8% or higher.

Dominion Energy also said, once the merger is completed, a notable attribute of the combined company would be operating in 18 states from Connecticut to California.

The company would deliver energy to about 6.5 million regulated customer accounts in eight states and have an electric generating portfolio of 31,400 MW and 93,600 miles of electric transmission and distribution lines. 

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Gregory B. Poindexter formerly was an associate editor for HydroWorld.com.

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