Dominion attributes $1B annual earnings drop to SCANA acquisition
In total, the value of the transaction, including assumption of debt, is $14.6B.
Richmond-based Dominion Energy Inc. reported $1.4 billion in earnings for 2019 — $1 billion less than the utility earned during 2018, the company reported in its fourth-quarter earnings call Tuesday.
The difference in earnings is primarily related to Dominion’s acquisition of SCANA Corp., which closed on Jan. 3, 2019, says Dominion spokesperson Ryan Frazier. The South Carolina-based utility holding company was a majority partner in a failed nuclear reactor construction project that SCANA abandoned in 2017 due to rising costs, work delays and the bankruptcy of its main contractor, Westinghouse Electric Co.
Virginia Business reported in January 2018 that Dominion and SCANA had announced an agreement for the companies to combine in a $7.9 billion all-stock deal — including the assumption of debt, the value of the transaction was approximately $14.6 billion. In Dominion’s reported earnings to operating earnings, approximately $2.3 billion of merger and integration-related costs were attributable to the SCANA acquisition in 2019. About $1 billion of those costs went to refunds to retail electric customers of Dominion Energy South Carolina for the failed nuclear project.
“A lot of it was customer refunds that we took below the line,” Frazier says of the difference in annual earnings. “We bought the company after [SCANA] walked away from the project. … We worked on a plan to give ratepayers back a lot of the money they had put into the project previously.”
Dominion included both operating and reported earnings in accordance with Generally Accepted Accounting Principles (GAAP) in its fourth-quarter release kit to investors. Non-recurring costs, including acquisitions, can cause differences between reported and operating costs.