Dominion Energy to buy Scana, assume failed nuclear project costs

Dominion Energy Inc (D.N) said on Wednesday it would buy Scana Corp (SCG.N) in an all-stock deal worth about $7.9 billion, offering the utility a way out of dealing with unhappy customers and federal investigations following a failed nuclear project.

Dominion will pay Scana’s customers $1.3 billion, averaging about $1,000 for each customer, and has promised to cut bills by 5 percent to appease users who have been overcharged for years as Scana funded the nuclear project.

Shares of Dominion, which will also assume Scana’s debt of $6.7 billion, were down 3 percent.

Dominion’s $55.35 per share offer represents a premium of 42.4 percent to Scana’s last closing price of $38.87. Scana’s shares were trading well below the offer price at $47.79, suggesting some investors were skeptical of the deal.

Scana, which owns the South Carolina Electric & Gas Co (SCE&G), has been under pressure ever since it scrapped the V.C. Summer nuclear project in July after spending about $9 billion on it with Santee Cooper.

Scana was funding some of the project’s costs from SCE&G, a move that angered customers and led to the utility rolling back electricity rates for residential users.

The nuclear project became a lightning rod for criticism, with local politicians arguing over who should pay for the aborted project.

Dominion Virginia Power's North Anna Power Station in Mineral, Virginia. Courtesy Dominion Power/via REUTERS
South Carolina Governor Henry McMaster said while the deal is a step in the right direction, it will not resolve all problems for customers.

“The only way to resolve this travesty is to sell Santee Cooper,” McMaster said, noting that the state-owned utility had racked up debt of $4 billion as it partnered Scana on the project.

As part of the deal, Dominion will also write off more than $1.7 billion in connection with the abandoned nuclear plant.