Editor's note: This column originally ran in the Wednesday edition of the Post and Courier.
It is easy to understand why SCE&G electric customers are frustrated and angry about the abandoned V.C. Summer nuclear expansion project. Nine rate …
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It is easy to understand why SCE&G electric customers are frustrated and angry about the abandoned V.C. Summer nuclear expansion project. Nine rate increases and they are not likely to see one watt of electricity from it. The feelings are natural.
The question before South Carolina policymakers is what to do about it. Should they go for a temporary quick fix knowing it risks making matters worse? Or, do they work toward a permanent solution that locks in long-term customer benefits? Hard-working members on both sides of the aisle are wrestling with the issue.
Given the importance of energy, we believe a comprehensive, permanent solution with guaranteed customer benefits and less risk is the best course. That is the heart of our proposal for Dominion Energy to combine with SCE&G and its corporate parent, SCANA.
You probably have seen our offer: $1,000 cash payments for the average residential customer as part of $1.3 billion returned to ratepayers; a rate reduction of at least 5 percent, funded largely by $575 million from Dominion Energy; and $1.7 billion in nuclear costs absorbed by our company. The total value to customers is $12.2 billion including direct payments and avoided costs.
We know our plan is not perfect. It substantially reduces but does not eliminate what customers would pay in new nuclear costs.
That said, we believe our plan works better than anything else being discussed. It pairs lower rates with returning money to customers almost right away. Any plan without customer payments shifts benefits to newcomers who never have paid toward the nuclear project.
Second, our plan does not portend years of costly litigation that could result in electric rates significantly higher than they are now.
Finally, it provides the state with a strong energy partner able to invest in renewable energy, grid security, improved reliability and community engagement.
Our proposal builds on a successful history in South Carolina. We recently completed the state's largest solar farm and we have a 1,500-mile natural gas pipeline headquartered in Columbia.
Nationally, we are a leader in reducing carbon emissions and developing cost-effective renewable energy - one reason that Facebook announced a $1 billion solar-powered investment in our home state of Virginia. Dominion Energy regularly is named among the best utilities in attracting new businesses. We are especially proud of being cited as one of the very best companies for military veterans.
It may feel good and seem right to force SCE&G to stop charging for the nuclear expansion by retroactively reversing the Base Load Review Act. As growing evidence shows, that is a cure worse than the disease.
A move to roll back the law permanently was halted when an opinion by a highly respected former U.S. Circuit Court judge showed it likely would be declared unconstitutional. A new approach is now being floated to effectively reverse the law on a temporary basis and is raising the same constitutional questions.
Unfortunately, the well-intentioned legislative action could push rates higher - not lower. Citing "a political and regulatory environment that has become exceedingly contentious and uncertain," Moody's Investor Service this week lowered the unsecured credit rating of SCANA to "junk" status and put SCE&G on the brink of it. At a time when SCE&G needs to invest more than $5 billion over the next decade to maintain its system and support customer growth, lower credit ratings will increase financing costs and drive up customer bills.
It could become worse if SCE&G is pushed into bankruptcy. That would trigger even higher financing costs and rates as well as lengthy legal challenges. The lights would stay on, but South Carolina's energy future would be in the hands of federal courts whose first responsibility is not to customers but largely out-of-state creditors. It also would cost taxpayers millions of dollars of legal fees and tarnish South Carolina's reputation as a good state in which to do business.
Policymakers should weigh their decisions carefully. If there truly is a better proposal than ours, South Carolina should take it. No one's hand is being forced to accept any alternative. Before doing so, however, every "what if" should be tracked to its ultimate end. The consequences are too great to act without thinking through every possible outcome.
After all the analysis is done, we believe Dominion Energy's proposal will shine through. It is the bird in the hand that is better than two "maybe" birds in the bush. It provides substantial customer benefits up front and over the long term. Unlike others, it also addresses the needs of communities, employees and other stakeholders. It will bring a brighter energy future to South Carolina.
Thomas F. Farrell II is chairman, president and CEO of Dominion Energy.
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