A South Carolina utilities watchdog has issued a report that says SCANA Corp. and subsidiary South Carolina Electric & Gas most likely won't go bankrupt if their V.C. Summer surcharge is slashed.
"The current circumstances indicate that bankruptcy is not likely," a headline within the Jan. 18 report reads.
Rick Mendoza, who handled the report for the S.C. Office of Regulatory Staff, said the possibility of bankruptcy filing does exist — but he thinks it's only 35 percent likely.
"I believe it is unlikely that the companies will file bankruptcy as a result of the elimination of the 18 percent charge," Mendoza, a Columbia bankruptcy attorney, wrote in his report.
Columbia-based bankruptcy attorney Rick Mendoza analyzed the likelihood of SCANA going bankrupt if the company's 18 percent V.C. Summer surcha…
SCE&G has, since 2009, charged customers an additional 18 percent, roughly $27, per month — totaling $444 million a year, according to Mendoza — to recoup the company's V.C. Summer nuclear expansion losses.
Several South Carolina politicians, including Gov. Henry McMaster, have taken the stance that the surcharge, legalized in 2007 via the Base Load Review Act, should be eliminated. Some have also argued SCE&G customers deserve a full-blown refund for what they have paid already.
In two letters to SCANA chiefs, McMaster called the 18 percent charge "oppressive" and burdensome.
The average residential customer has paid more than $1,400 for the V.C. Summer project, according to a previous Office of Regulatory Staff analysis.
Both SCE&G and Dominion Energy, the Virginia-based utilities goliath that has offered to buy SCE&G corporate parent SCANA, have argued repealing the Base Load Review Act, essentially getting rid of the 18 percent charge, would bankrupt the South Carolina utility.
S.C. Gov. Henry McMaster has repeatedly called for the end of V.C. Summer-related SCE&G customer charges.
Repealing the 2007 law would axe Dominion Energy's planned purchase, too: Dominion Energy President and CEO Thomas Farrell has said the takeover deal is contingent on at least 20 more years of V.C. Summer charges. Farrell said his company's offer was the best deal the state has and should expect.
Chet Wade, Dominion Energy's vice president of corporate communications, in a sit-down with the Aiken Standard, said the company would be fine with a repeal as long as it didn't require retroactive reimbursements.
"A rollback of the Base Load Review Act would be a real problem for us," Wade said Jan. 16.
Farrell has told state regulators his company's deal could save the state from SCANA's otherwise ugly demise.
That downfall, though, has been described as a "scare tactic" by S.C. Senate Majority Leader Shane Massey, R-Edgefield.
Massey co-chairs a special S.C. Senate committee charged with investigating the Fairfield County nuclear debacle.
"It confirms what I thought all along," Massey said Monday of Mendoza's analysis, "that the threat of bankruptcy was a bluff."
In his report, Mendoza said SCANA's annualized distributed profits — totaling $443 million pre-tax — would mostly cover the estimated $444 million loss attributed to V.C. Summer rate cuts. The annualized calculation assumes a 21 percent tax rate.
S.C. Senate Majority Leader Shane Massey, R-Edgefield.
"The eliminating of the 18 percent charge might mean the suspension of dividends," Mendoza wrote, "but not the immediate need to file bankruptcy."
"SCANA is really not in danger of bankruptcy," Massey said, adding that he's felt that way for at least five months.
State Rep. Bill Hixon, R-North Augusta, agreed with Massey's intimidation sentiments.
"This report from ORS confirms exactly what we were trying to say the whole time," Hixon said Monday. "They were trying to scare us into voting for something in a hurry."
"I don't like it when people start getting pushy," Hixon continued, later adding: "SCANA can save itself if they just hold on."
Hixon is a sponsor of several S.C. House bills that address the V.C. Summer fiasco, including one that seeks to reset the Public Service Commission's composition and one that requires ratepayer refunds.
Massey said SCANA's bankruptcy claim is "another reason to question" the company's credibility. He said Dominion Energy's credibility — for enabling and encouraging such a push — may also come into question.
State Rep. Bart Blackwell, R-Aiken, who serves on the S.C. House Utility Ratepayer Protection Committee, said the Office of Regulatory Staff report "sounds like good news."
"I think it does make the situation better," Blackwell said Monday.
Blackwell believes the potential consequences of a Dominion Energy withdrawal are now dampened — he said it's "less dire."
"You would think that, potentially, it would maybe change our perspective..." he said. "Maybe our options, maybe we have more."
Inquiries made to SCANA were not immediately answered.
