Dominion Energy and SCANA merge in US$14.6bn deal

DOMINION ENERGY and fellow energy corporation SCANA have announced that they are to combine in an all-stock merger worth US$14.6bn, including debt.

SCANA shareholders will receive 0.6690 shares of Dominion Energy common stock for each SCANA share they hold, the equivalent of US$55.35/share, or US$7.9bn in total. Following the merger, SCANA will operate as a subsidiary of Dominion Energy and retain its South Carolina headquarters.

Jimmy Addison, chief executive officer of SCANA said that joining Dominion Energy “strengthens our company and provides resources that will enable us to once again focus on our core operations and best serve our customers.” SCANA has struggled in recent months after it and Santee Cooper abandoned the construction of two new Westinghouse units at the VC Summer nuclear plant in South Carolina after the bankruptcy and collapse of Westinghouse and huge cost and schedule overruns.

Dominion Energy’s chairman, president and CEO Thomas Farrell said that the acquisition will add to the company’s presence in the southeast of the US and cement its position as one of the largest energy companies in the country. The combined company will have an electricity generating portfolio of 31,400 MW and 6.5m customers.

Domestic electricity customers of SCANA subsidiary SCE&G are set to benefit from the deal, with each receiving an average of US$1,000, depending on how much electricity they have used in the past year. This is to offset payments customers have made towards costs incurred by SCE&G over the VC Summer nuclear plant in South Carolina. US law allows utilities firms to recoup costs in this way, however, this is now being reviewed by regulators. Farrell said that it is the largest customer cash refund in history. Customers will also receive a 5% rate reduction. The transaction is conditional upon officials in South Carolina approving this plan.

“We will seek the approval of the Public Service Commission of South Carolina for the immediate customer payments, rate refunds over time and other conditions related to resolution of the V.C. Summer Units 2 and 3 situation,” said Farrell. “We believe it is in the best interests of all parties to reach an agreement on this critical issue. 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.”

Dominion Energy has also pledged US$1m/y in funding for charitable contributions for SCANA communities and to protect the jobs of SCANA employees until 2020.

The merger is still subject to regulatory approvals.