After 14 day-long sessions, the final day of the PSC hearing had arrived. The preceding day Dominion had signaled that it would be making another best and final proposal to be introduced by a previous witness.
But the first witness was Stephen Byrne, SCANA’s former Chief Operating Officer. No new ground or revelations came from this testimony. He denied that SCE&G or any of the executives had done anything wrong.
Mr. Byrne’s said that in 2016 he thought the project was going so well that he turned down a more lucrative position at another utility.
Prabir Purohit was the last witness for the hearing. Mr. Purohit, Dominion’s Director of Mergers and Acquisitions, was tasked with presenting Dominion’s latest best and final offer to purchase SCANA/SCE&G. He warned that should the PSC take the ORS proposed rate cut of about 20%, Dominion would not move forward with the merger.
The new proposal outlined by Mr. Purohit was to keep the experimental rates, the 15% temporary rate cut put in place at the instruction of the legislature. This would be about a 1% more of a reduction in rates than the previous Plan B of Dominion. Several of the Commissioners had expressed interest in Dominion accepting the experimental rate.
Mr. Knapp asked Mr. Purohit about his knowledge of how the experimental rate was arrived at by the legislature. Did he have any reason to believe that the legislature first picked 15% as the rate cut and then figure out how to get there? He said that he had no idea.
Mr. Knapp asked if the legislature in deciding on the experimental rate use any of the benefits from the 2017 Tax Cuts and Jobs Act (TCJA) that SCE&G will receive. He said that he didn’t know but that Dominion’s new proposal, Plan B-L, did include some of the TCJA benefits to help arrive at the 15% rate cut.
The figure 2.7% was the tax cut agreed would be received by SCE&G under the TCJA. Mr. Knapp asked if he had looked at the percent of tax relief that other utilities were passing on to their customer. He said that he hadn’t.
Mr. Knapp asked if he knew whether Dominion was already passing on the TCJA benefits to its customers in Virginia and how much. He said that he did not know.
Mr. Knapp made the remark that Mr. Purohit had derived the 2.7% number without the benefit of knowing the percent that other utilities and Dominion were using and passing on to their customers.
Mr. Knapp also asked where the extra money was found to reduce the rates in Plan B-L more than in Plan B. He said that more shareholder money was used.
Mr. Knapp told Mr. Purohit that in questioning several days earlier, Dominion CEO Mr. Farrell had acknowledged that the original Dominion Plan A and Plan B were basically the same, just distributing the customer benefits differently. Mr. Purohit agreed with that assessment. Mr. Knapp pointed out that Mr. Purohit’s only testimony was that Plan B-L was pretty much the same as Plan B so wasn’t Dominion simply re-arranging the chairs in the room.
Mr. Knapp then showed Mr. Purohit a statement made by SCE&G witness Hubbard (the $1500 an hour economist consultant). That statement read:
“If the Experimental Rate becomes permanent, SCE&G would suffer hundreds of millions of dollars in additional lost revenue, which would have a larger negative impact on SCE&G;s financial condition, credit, and cost of capital.”
Mr. Knapp reminded Mr. Purohit that Dr. Hubbard agreed that SCE&G accepting the experimental rate (a 15% rate cut) wouldn’t be committing financial suicide because it would be a business decision based on more factors than simply rates. Mr. Purohit agreed with the assessment that there are other factors besides rates that go into a business decision such as Dominion’s decision to continue with the merger.
Mr. Knapp’s final question was about Dominion trying to put the rates under its Plan B-L in a favorable light by comparing them to similar rates by other utilities in South Carolina, the South Atlantic. He asked Mr. Purohit if this was to be the new method the PSC should use going forward with setting rates. Dominion’s attorney objected.
The hearing concluded with the Speaker of the House’s attorney announcing that the Speaker supported Dominion’s Plan B-L.