Testifying for the SCANA merger
As I mentioned in my previous post, for my day job I work in finance at Dominion Energy- a Fortune 500 company in the power and energy industry. This means I can be called into a variety of different projects at the company, one of which was the recent merger of Dominion and SCANA (SCE&G), a South Carolina power company. This was a very high-profile merger that attracted a lot of attention in Columbia and around the state of South Carolina. I was called in to testify before the South Carolina Public Service Commission on behalf of Dominion to respond to specific aspects of the South Carolina Office of Regulatory Staff’s alternative rate proposal. This below testimony has a lot of financial jargon, but essentially it was meant to clarify some specifics of our proposed merger and explain some of the benefits to the customers in South Carolina. While providing a public testimony isn’t the most exciting thing in the world, it was a great experience and I really like getting out of my bubble and exploring different parts of the country. Columbia, South Carolina is definitely worth a visit! Take a look below for the introductory of the testimony and you can read it in full here.
REBUTTAL TESTIMONY OF
ON BEHALF OF
DOMINION ENERGY, INC.
DOCKET NO. 2017-370-E.
Q. PLEASE STATE YOUR FULL NAME, BUSINESS ADDRESS, AND OCCUPATION.
A. My name is Prabir Purohit and my business address is 120 Tredegar Street,
Richmond, Virginia 23219. I am the Director of Mergers and Acquisitions and
Financial Analysis at Dominion Energy, Inc. (“Dominion Energy”).
Q. PLEASE STATE YOUR EDUCATIONAL BACKGROUND AND
A. I earned a bachelor’s degree in Aerospace Engineering from the Indian Institute of Technology, a master’s degree in Aerospace Engineering from Iowa State University, and a Masters of Business Administration from the Goizueta School of Business at Emory University. I have over 17 years of experience in the power and utility industry specifically related to corporate finance, capital markets, and mergers and acquisitions. I started my career at Mirant Corporation, an independent power producer, in Atlanta where I was involved in business planning and evaluation of power generating assets. Subsequently, I moved to Merrill Lynch and later Bank of America where I focused on investment banking covering the power and utility space globally. I have worked with a significant number of power and utility companies in the U.S. and globally advising on strategic M&A and capital markets financings. I joined Dominion Energy in 2016 and have been in my current role since July 2018.
Q. WHAT IS THE PURPOSE OF YOUR REBUTTAL TESTIMONY?
A. The purpose of my testimony is to respond to specific aspects of the South Carolina Office of Regulatory Staff’s (“ORS”) alternative rate proposal, the “ORS Plan.” Witness James I. Warren will address certain tax matters related to the ORS Plan.
Q. PLEASE PROVIDE A BRIEF OVERVIEW OF THE CUSTOMER BENEFITS PLAN.
A. As a condition of the merger, Dominion Energy and SCE&G are requesting Commission approval of a customer benefit and cost recovery plan for the new nuclear development costs associated with the V.C. Summer Units 2 & 3 project (the “NND Project”), referenced in the Joint Petition as the Customer Benefits Plan.
The Customer Benefits Plan includes an up-front, one-time rate credit to SCE&G’s customers totaling $1.3 billion, which translates to an estimated $1,000 per residential electric customer on average, and significantly more for larger (in terms of usage) consumers in the residential, commercial, and industrial customer classes. In addition, the regulatory liabilities representing the change in the gross- up factor and the 2018 amortization of excess deferred income taxes (“EDIT”) associated with the reduction in the federal income tax rate under the 2017 Tax Cuts and Jobs Act (“TCJA”) will be provided to customers as a one-time rate credit. After the merger, SCE&G will exclude from rate recovery in total approximately $1.4 billion in NND Project costs and approximately $361 million in regulatory assets related to the NND Project, removing any future customer obligation for these costs. Dominion Energy will further underwrite a $575 million refund pool for SCE&G to use to refund amounts previously collected for the NND Project that, along with the benefit of recent federal income tax reform, will allow SCE&G to provide a bill reduction that is estimated to total approximately 7% relative to May 2017 levels for a typical residential bill. The refund pool is required to keep the NND Project portion of the bill at that level for approximately eight years, after which the NND Project portion of the bill naturally reduces as a result of rate base reduction through the 20-year amortization. As discussed by Company Witness Warren, the NND Project rate base will be adjusted for certain deferred income taxes. Further, the acquisition cost of the partial replacement generation capacity for the NND Project—a $180 million investment in the gas-fired Columbia Energy Center—will be absorbed by Dominion Energy shareholders and not collected in rates. Finally, to further ensure rate stability, other than the adjustments described in the Joint Petition and my testimony, the Parties agree to freeze retail electric base rates—the non-fuel related and non-NND Project portion of rates—until at least January 1, 2021.
Read the full testimony here: https://dms.psc.sc.gov/Attachments/Matter/56cd7a31-d792-4f6a-8967-c9d0c6b81eb1
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