Analysis Group Affiliate Testifies in Successful Utility Merger in South Carolina

April 03, 2019

Analysis Group was retained to assist the South Carolina Electric & Gas Company (SCE&G) in connection with its proposed merger with Virginia-based Dominion Energy Corporation. In its merger review, the Public Service Commission of South Carolina focused on the extent to which electricity rate increases were related to SCE&G’s plan (later abandoned) to build two nuclear reactors. Supported by a team led by Managing Principal R. Jeffrey Malinak, Analysis Group Affiliate R. Glenn Hubbard testified at a preliminary injunction hearing in Federal Court and before the Public Service Commission on a variety of issues related to regulatory economics and the electricity rates that the combined entity would charge. In particular, Professor Hubbard offered direct and surrebuttal testimony on the economic effects of retroactive rate regulation; the extent to which sunk costs related to the abandoned nuclear project should be figured into SCE&G’s rates; whether a temporary rate cut enacted after the abandonment of the nuclear project should be made permanent; and the rates that would protect both the short- and long-term interests of both ratepayers and the post-merger entity. The merger was approved, and Dominion announced in January 2019 that it had successfully completed the combination of the two companies.