SCANA Corp. threw the future of its dividend into question on Thursday, telling shareholders it wasn't sure if it would make its quarterly payments come July.
The announcement, which was included in the power company's earnings report, highlights the pressure building on SCANA to cut its dividend. After its nuclear project failed, angry ratepayers have called on the company to cut its dividend and give them the savings.
The delayed dividend decision also acknowledges that before long, SCANA might not have a choice. The state Legislature is deep into a debate over a plan to slash its electricity rates, which could force the company to cut its shareholder payouts.
SCANA, which owns South Carolina Electric & Gas, said it would make a decision on its dividend "closer to" mid-June — after lawmakers go home for the year.
The company has been paying its investors $87.4 million every three months, and it has already announced $262 million in dividends since it halted construction on the expansion of the V.C. Summer Nuclear Station last July. It had been holding firm amid calls for the payments to end.
Dividend payments are a key lure for investors in any utility stock, but the steady flow of cash has helped prop up its share price. SCANA's stock, which has shed half its value since last summer, slumped Thursday morning before rebounding in the afternoon. Shares finished the day off 0.5 percent.
Shar Pourreza, a utility analyst at New York-based Guggenheim Partners, said the announcement didn't come as a surprise, but it reflects how tight the company's finances could get if it's forced to eat more of the cost of the nuclear project.
"It's 100 percent a cash-flow issue," Pourreza said.
SCE&G electricity users are charged $37 million a month for the unfinished nuclear reactors, eating up nearly a fifth of the bills they pay. Their monthly nuclear payments finance much of SCANA’s dividend payments.
SCANA told regulators last month that roughly of a quarter of its dividends can be traced back to payments for the nuclear project. Shareholders have pocketed nearly half a billion dollars from the project alone over its decade-long history.
The company had hardly blinked as it announced three-straight dividends since killing the V.C. Summer project. The biggest change it has made so far is to say that the payments will be "evaluated quarterly." It reiterated that warning Thursday.
SCANA didn't answer questions about whether the dividend delay was connected to the political firestorm in Columbia. But it's possible that the Legislature won't cut SCE&G's electricity rates.
The state House and the Senate have both voted to cut SCE&G's nuclear collections, but they can't agree on how low rates should go. The legislative session is winding to an end, with just two weeks left.
SCANA reported earnings of $169 million in the first three months of the year, a slight dip from the same period of 2017. The company said its profits were nicked by fees it paid to lawyers and financial advisers.
The company faces more than a dozen lawsuits from its investors and ratepayers over the nuclear project, and it's being probed by state investigators, a federal grand jury and the U.S. Securities and Exchange Commission.
The project's failure also led it to hire financial advisers: They're helping guide its prospective sale to Virginia-based Dominion Energy, a utility giant that stepped in with a proposal to clean up the nuclear debacle.