SCANA (SCG)-Dominion Energy Merger Receives Sixth Approval

The impending merger of SCANA Corporation (NYSE:SCG) and Dominion Energy, Inc (NYSE:D) made progress, post the receipt of another approval from the North Carolina Utilities Commission. This marks the sixth of seven approvals necessary to close the merger.

Previously, the merger received approval from SCANA's shareholders, the Federal Energy Regulatory Commission, the Georgia Public Service Commission, the Nuclear Regulatory Commission and early termination by the Federal Trade Commission of the 30-day waiting period under the federal Hart-Scott-Rodino Antitrust Improvements Act.

The merger is subject to approval from the Public Service Commissionof South Carolina, which has been holding hearings since Nov 1, 2018. A final decision is anticipated by Dec 21, 2018.

To secure the proposed purchase of SCANA, Dominion Energy has made the takeover offer more attractive. Per the new plan filed with South Carolina regulators, Dominion Energy has proposed a 15% rate cut for SCE&G customers, which is 8 cents more than the temporary cut imposed by state lawmakers. The new rate cut also implies $1.70 less than Dominion Energy’s previous offer made in October.

Subject to approval by the Public Service Commission of South Carolina, Dominion Energy’s latest offer will reduce SCE&G’s power bills by about $22 a month for the average customer. Per the regulatory staff’s proposal, SCE&G customers will have to pay about $1,280 more for the abandoned nuclear project over the next two decades.

Meanwhile, the same customer will pay about $1,600 over the same span according to Dominion Energy’s latest offer, down from the previous payment of $1,700-$3,000.

The company has made a series of proposed concessions to South Carolina lawmakers and state regulators since January 2018, when it first announced intentions to purchase SCANA.

The first offer included a $10-a-month rate cut and nuclear refunds worth $1,000 per customer to SCE&G’s electric customers. During that period, Dominion Energy officials stated that this was the best and final offer for SCANA.

A few months later, Dominion Energy made a secret proposal to lawmakers and offered to raise nuclear refunds to $1,530 per household on condition that the General Assembly will support the purchase of SCANA.

In October 2018, Dominion made another offer. It reduced SCE&G’s nuclear surcharge by about $20 a month and dropped the proposed nuclear refunds. The new plan will reduce the monthly nuclear bill to $7 from the previous amount of $27.

Over the last 10 years, SCE&G hiked its electric rates nine times, totaling $27 a month for the typical customer to fund the V.C. Summer project. The project was abandoned in July 2017 after years of cost overruns and construction delays.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Zacks Rank & Key Picks

Currently, SCANA has a Zacks Rank #4 (Sell).

A few better-ranked players in the same sector are Hess Corporation (NYSE:HES) and Energen Corporation (NYSE:EGN) , each sporting a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research

Written By: Zacks Investment Research