Washington — The US Federal Energy Regulatory Commission approved Dominion's proposed acquisition of Scana, the parent company of South Carolina Electric & Gas.
The approval is a "significant milestone" in the deal, Dominion and Scana said in a joint statement Friday.
The acquisition has been driven by the financial uncertainty surrounding SCE&G's canceled effort to build to nuclear generating units in Jenkinsville, South Carolina. The utility abandoned the project a year ago after the bankruptcy of the units' main contractor Westinghouse, which had provided a fixed-cost guarantee on the effort to add reactors at the Summer station.
SCE&G and partner Santee Cooper had spend $9 billion when work stopped, and South Carolina officials have criticized the companies for their management of the project.
In January, Dominion announced an offer of $7.9 billion in stock for Scana, plus the assumption of debt and a package of customer benefits.
In June, however, lawmakers in South Carolina passed a bill preventing the state Public Service Commission from approving the acquisition before December and sharply cutting the amount SCE&G could collect from ratepayers in connection with money spent on the nuclear plant expansion. SCE&G filed suit in federal court June 29 requesting that the legislation be declared unconstitutional.
Dominion CEO Thomas Farrell said earlier this year that passage of a law eliminating nuclear project rate recovery might see Dominion walk away from its offer to buy Scana.
However, in the statement Friday, Farrell said he was pleased by FERC's action and looked forward to closing the transaction by the end of the year.
Financial analysts have said that because the law is temporary, Dominion may be able to adjust its offer of customer benefits in connection with the purchase of Scana to keep the deal financially viable.
The sale requires approval from Scana shareholders, the South Carolina PSC, North Carolina Utilities Commission and the Nuclear Regulatory Commission. It has previously been approved by the Georgia PSC and given early termination by the Federal Trade Commission of the 30-day waiting period under the Hart-Scott-Rodino antitrust act.
FERC said the transaction is consistent with the public interest.
FERC said in the order that the only markets where Dominion and Scana have generating assets is in the SCE&G balancing authority area, where Dominion holds 81 MW, all under long-term contract to SCE&G. Neither utility sells into the power market where the other sells, with the exception of that long-term contract, FERC said, citing the applicants.
Operational control of Dominion's transmission facilities is held by PJM Interconnection, while Scana's transmission facilities are operated pursuant to an open access transmission tariff, which the applicants said would diminish any market power concerns, FERC said.
Overlap in Dominion's natural gas pipeline and the Scana electric generation service area will not create adverse market effects, FERC said, citing the applicants.
FERC said the companies have agreed to not pass on transaction-related costs to wholesale power and transmission customers, and if they elect to do so during the next five years they must submit a new filing with the commission under Section 205 of the Federal Power Act.
