SCANA Corp. slashed its quarterly dividend for the first time in almost two decades Thursday, deciding to pay out less cash to shareholders a day after lawmakers moved to cut the rates it charges its South Carolina electricity users.
The Cayce-based owner of South Carolina Electric & Gas said the money it returns to its investors next month would drop by 80 percent. That’s how much of the payout came from its electricity business in South Carolina.
In all, the dividend will total $17.6 million, or about 12.4 cents per share of common stock. That’s down from previous quarterly payments of about $87 million. It affects a swatch of stockholders, from retirees that rely on the steady income to huge Wall Street investment funds.
It is SCANA's first dividend cut in nearly 20 years, highlighting the financial maelstrom hovering over the company a year after it scuttled plans to expand the V.C. Summer Nuclear Station.
The move was widely expected after the utility owner’s board twice delayed a decision on the payments. But the reduction didn’t become official until after lawmakers took their most decisive action yet on SCE&G's future.
The Legislature voted Thursday to temporarily cut SCE&G’s rates by 15 percent, overriding a veto from Gov. Henry McMaster. The measure puts a stop — for now — to most of the utility's charges for the nuclear project. Lawmakers also cleared a path for regulators to make the rate reduction permanent.
The company said the dividend cut was meant to “preserve its options” as it tries to resolve who pays for the failed expansion of the V.C. Summer power plant north of Columbia. The abandonment of the $9 billion project last summer threw South Carolina’s energy sector into chaos.
Financial studies have indicated that SCANA could stay solvent after losing its nuclear funds by suspending its dividend. Those findings helped shepherd the Legislature's compromise to passage, winning approval by an overwhelming margin.
Shares of SCANA stock plunged Wednesday on news of the Legislature’s agreement, but they rebounded Thursday after the dividend cut was announced. The reduction is seen as an important step to saving the company’s plans to be acquired by Dominion Energy.
Richmond, Va.-based Dominion might stick around because SCANA shouldn't need to borrow money to cover the electric rate cut, according to analysis by New York-based Guggenheim Partners. Analysts said in a research note that by cutting its dividend, SCANA can prevent the Legislature's actions from weakening its credit rating.
Rates tied to the V.C. Summer project had financed about a third of SCANA’s dividends. Shareholders took in more than half a billion dollars from electricity users’ payments for the project.
The future of SCE&G’s rates is still in flux as regulators wait to set the utility’s permanent rates. SCANA said its dividends were likewise in flux, and its board would re-evaluate them each quarter.
The latest dividend payment, which includes money from SCANA’s natural gas businesses, will be made on July 18.