If state utility regulators approve Dominion Energy’s latest plan to buy South Carolina Electric & Gas, their decision would also wrap up a contentious class-action lawsuit demanding refunds for the power company’s customers.
A group of attorneys representing SCE&G ratepayers said Saturday that they agreed to Dominion’s most recent offer. That proposal includes about $2 billion in credits toward future electric bills to make up for SCE&G’s failed nuclear project. But it would require customers to pay another $2.3 billion for two unfinished reactors over the next two decades.
If regulators sign off on that plan, the law firms say they’ll drop the lawsuit, which had asked for a refund of the more than $2 billion that customers poured into the V.C. Summer Nuclear Station north of Columbia.
As part of the legal settlement, SCE&G also agreed to pay out $115 million that was set aside for executives and to sell off some of its real estate, including its office on Meeting Street in downtown Charleston, to pay for refunds.
It wasn’t clear Saturday how much of that would go to electricity users and how much would be collected by the law firms that pressed the case.
The settlement, which still needs to be approved by a circuit court judge, was announced Saturday, just days after the state’s utility regulators finished a three-week hearing that will decide how much SCE&G customers pay for the nuclear project moving forward.
If those same regulators reject the latest plan, the legal settlement will be called off and the class action lawsuit will proceed.
SCE&G said Saturday any refunds would be divvied up through bill credits to current ratepayers and checks to former customers. The settlement doesn’t apply to customers of Santee Cooper or the state’s 20 electric cooperatives, which are on the hook for just under half of the project's cost.
Dominion's plans to seal a settlement already has opposition, however. The state’s utility watchdog agency — the Office of Regulatory Staff — rejected the offer last week, as it continued to push for larger savings for SCE&G customers. The legal settlement would be called off if regulators side with the agency but the Office of Regulatory Staff can't block the deal directly.
The class action lawsuit had become an all-or-nothing fight that threatened to force SCE&G’s investors to pick up the entire tab for the nuclear project. Just last month, Judge John Hayes III was said to be considering overturning the 2007 law that allowed SCE&G to charge for the reactors before they were finished.
If the judge had ruled that law unconstitutional, SCE&G could have been forced to refund all the money it has collected and prevented from charging customers anything more for the reactors that the company was building at the V.C. Summer power station north of Columbia.
The settlement is likely to keep that controversial law intact, which would preserve Dominion's bid to take over SCE&G’s parent company, Cayce-based SCANA Corp.
SCANA denied any wrongdoing as part of the settlement. Its top lawyer, Jim Stuckey, said the company was “pleased that we were able to achieve a mutually acceptable resolution of this matter so that we can keep our focus on moving forward with the merger with Dominion Energy.”
The ratepayer lawsuit had been one of the main inquiries into the failed nuclear project, which for the past year has been under the microscope of regulators, law enforcement and several private law firms representing the company’s ratepayers and investors.
"I think everybody agreed that this is a fair and reasonable settlement given the circumstances," said Pete Strom, the lead counsel in the class action lawsuit.
Last month, the ratepayer lawsuit captured the attention of Wall Street and SCANA’s remaining investors.
News leaked out that Judge Hayes was considering overturning the 2007 Base Load Review Act, the now controversial law that allowed SCE&G to increase people’s monthly electricity bills for the reactor project every year.
That proposed ruling was the utility’s worst nightmare. If it was approved, it could have forced the company to eat the entire cost of the nuclear project and refund the entire $2 billion it already charged customers since 2008.
But since then, no order has emerged. The settlement, if approved, would guarantee that it won’t be brought up again in this case.
Questions about the law’s validity were first raised by state Attorney General Alan Wilson’s office, which called it “constitutionally suspect” in the months after the nuclear project was called off last summer. But his office ultimately signed onto the settlement, too.
Wilson praised the settlement as “the largest of its kind in the history of South Carolina.”
The settlement and the end of hearings by regulators on the state’s Public Service Commission will draw to a close two of the most significant investigations into what went wrong at V.C. Summer.
They’ll also begin to resolve big legal questions, like whether utility executives did enough to raise alarms about the problems and whether they hid important information from the public.
The lawsuit and the regulatory hearing forced top executives and whistleblowers to testify, and they gave the utility’s opponents the right to demand troves of internal documents. As recently as this week, lawyers demanded to see emails between SCANA and its financial auditors, who approved its reports to investors.
But the legal questions aren’t answered for good. SCANA’s investors are still suing the company, accusing it of painting a rosy picture of the nuclear project’s progress while construction careened toward disaster.
Investigators from the FBI and the U.S. Securities and Exchange Commission are still probing the case as well. While executives testified before state regulators, a federal prosecutor and an FBI agent watched on.
And state law enforcement is still looking into the matter: Wilson, the state’s top legal official, said the deal “does not end our inquiry into the individual actors that may have contributed to the project’s failure.”