This story was reported and written by our media partner the Virginia Mercury.
Dominion Energy on Wednesday submitted their official arguments to the State Corporation Commission to allow the utility to merge with the Florida-based NextEra. The utilities plan to combine, creating an East Coast energy titan.
The all-stock deal is valued at about $67 billion; NextEra shareholders will own 74.5% of shares and Dominion shareholders will own 25.5%, if the merger is approved. The SCC now has six months to review the arguments, hear testimony from both sides and make a decision on if the merger will succeed.
In an extensive interview with the Mercury, Dominion’s senior vice president of corporate affairs and communications Bill Murray said that the biggest draw of this merger is its combined buying power that could be of future benefit to ratepayers.
Murray said the joint company will be able to buy in bulk, ultimately bringing down the price of energy infrastructure and benefitting the entity’s credit rating.
“It’s not a matter of we threw our hands up and said we can’t do this, somebody, please, merge with us,” Murray said. “But doing it together … at a one-notch credit rating upgrade, financing it more efficiently. That’s a benefit to customers.”
The joint venture will cover 10 million customers across Florida, Virginia, North Carolina and South Carolina. It will also combine Dominion and NextEra’s110 gigawatts of power, and their large-load customer connection queue totaling 130 GW.
Dominion, which will remain as its own entity, will still be responsible for its fossil-free energy buildout under the Virginia Clean Economy Act and have to follow all orders from the SCC.
Murray said that the merger could also help bring more small modular reactors online when the technology becomes more readily available on the market.
The merger “doesn’t mean there’s cross subsidies financially. Virginia customers deal with a unit in Virginia, Florida customers deal with one in Florida,” Murray said. ”But being able to look at standardizing technology is something that makes a lot of sense.”
The planned merger has generated significant public scrutiny.
Advocacy group Clean Virginia urged lawmakers to be wary of some of the decisions NextEra has made in Florida concerning political lobbying and rate increases for their customers.
“Before Virginia ratepayers are locked into a relationship with NextEra Energy, every policymaker and regulator in the Commonwealth needs to understand what NextEra has done in Florida and ask hard questions about whether Virginians can expect anything different,” Clean Virginia Executive Director Brennan Gilmore said in a May statement when the merger was announced.
Echoing those concerns, Lieutenant Gov. Ghazala Hashmi posed a list of 64 questions to both companies, which she said they should answer before the SCC began the case and the legally-contracted time constraints would begin.
Dominion hasn’t answered all of the questions, Murray said, but he expects many of them to be addressed during cross examination during the case. That’s exactly what Hashmi argued against in her query to the companies.
“The existing baseline questions allow the applicants to frame the narrative in their own terms, potentially omitting the details, rigorous data support, and challenging topics necessary for a true public-interest review,” Hashmi wrote in her letter to the commission.
This is also not the first time that NextEra has attempted to acquire other utilities. The company had tried to merge with other companies in Texas, Hawaii, and South Carolina. Those efforts did not come to fruition.
When asked if Dominion was concerned about NextEra’s failed deals and accusations of shady political maneuvers, Murray said with new management and himself at the helm, he has confidence their new plan will go differently.
“The person responsible for the Dominion footprint today, in terms of public policy, government affairs, is me,” Murray said. “After this closes it’s me, because we’ve been very clear of current leadership teams of the utilities. So nothing’s changing how we do it.”
Virginia House members tried to give the legislature the chance to weigh in on this merger. But the language granting them that ability wasn’t included in the final budget that passed in June.
Murray said that the six-month review by the SCC will be thorough and dismissed concerns from Hashmi and others that it will not be enough time for regulators to make an informed decision.
“Some of the same voices (who) say three expert judges, a staff of hundreds, six months where this is a primary focus, that’s not enough time would be very comfortable if they had the votes doing this in 27 minutes on a legislative subcommittee. So I feel like there’s a little mismatch there,” Murray said.
A $2.25 billion shareholder-funded bill credit for customers across Dominion’s three-state coverage area is included in the SCC filing, which is slated to offset merger-related costs.
Ratepayers will see those savings for two years, and it is not clear if the savings will grow after that time period. Those changes would be determined by the SCC.
The commission is expected to release a schedule for the case in the coming weeks.
The merger faces applications for approval not only from Virginia’s SCC but also from the North Carolina Utilities Commission and the Public Service Commission of South Carolina.
The waiting period of the federal Antitrust Improvements Act would have to expire or be terminated for the merger to succeed, and the Federal Energy Regulatory Commission, Nuclear Regulatory Commission would need to give their approval, as well.