‘Moonshot’ demands: SCC staff, governor urge regulators to reject Dominion-NextEra merger as proposed

RICHMOND, Va. — New testimony filed with Virginia regulators is raising questions about the proposed $67 billion merger between Dominion Energy and NextEra Energy, including whether promised efficiencies can be quantified and whether Dominion Energy Virginia customers would be adequately protected from financial risks.

Staff for the State Corporation Commission is now recommending that regulators deny the merger as it is currently proposed, while leaving open the possibility of approval if the companies agree to additional protections.

At the same time, Gov. Abigail Spanberger is pushing for a package of additional customer benefits, including a six-year freeze on rate hikes and substantially larger monthly bill credits.

In response, NextEra and Dominion tell CBVS 6 they maintain that the merger would deliver more than $2.1 billion in direct customer and community benefits while strengthening their ability to invest in reliability and critical infrastructure.

Dominion and NextEra have said combining the companies would make their operations more efficient and help keep electricity affordable.

But testimony filed in the SCC proceeding raises questions about how much those efficiencies would actually save.

In Spanberger's filing, energy expert Richard McCann pointed to the companies' responses to questions during the regulatory review. One response states that the companies "have not prepared a standalone quantitative analysis identifying or assigning specific dollar values to any specific efficiencies expected to result from the proposed transaction."

The companies, in a filing, also acknowledged they have not guaranteed a specific amount of operational savings from the merger.

Spanberger said the lack of specific numbers makes it harder to ensure promised benefits ultimately reach customers.

"It doesn't actually provide the numbers behind their math, and so that would make it much more difficult to actually create any mechanism of enforceability," Spanberger said.

SCC staff also raised concerns about financial information disclosed during its review of the proposed merger.

After examining internal materials, staff said financial projections for the combined companies, including future earnings projections, were largely redacted. According to the filing, some of that information was not disclosed even under the commission's confidentiality protections, with the companies citing sensitive market information.

"Staff notes that, in general, it appears that any financial projections for the combined companies post-Merger, such as earnings per share projections, are largely redacted from the due diligence materials and, therefore, were not disclosed in discovery in this proceeding even under the extraordinarily sensitive or confidential designation," staff said.

Staff witness Carol Myers also identified differences in how Dominion and NextEra approach operating and maintenance costs.

Myers warned that if NextEra's approach were inappropriately applied to Dominion Energy Virginia, it could jeopardize the utility's ability to provide adequate electric service at reasonable rates. The specific details behind that concern are redacted from the public filing.

SCC staff also questioned whether Dominion Energy Virginia would be sufficiently insulated if another part of NextEra's business encountered financial problems.

"Staff does not believe that the proposed 'safeguards' identified by the Petitioners and memorialized as Merger Commitments are sufficient to protect DEV in the event of a bankruptcy elsewhere in the NextEra family of companies," staff said.

Because of those concerns, SCC staff is recommending the commission deny the merger under its current terms.

However, staff outlined additional protections that could address its concerns, including an independent Dominion Energy Virginia board, additional financial safeguards and 10 years of workforce protections. That would be twice as long as the companies' existing commitment to maintain Dominion's current Virginia workforce for five years.

Staff also wants another regulatory review seven to eight years after the merger closes.

"The Merger, if approved, would not be easily undone and would have very long-lasting impacts in Virginia," staff warned.

While SCC staff's testimony focuses heavily on financial safeguards, Spanberger is seeking additional protections directly aimed at customers.

The governor is calling for Dominion and NextEra to nearly triple their proposed monthly customer bill credits, increasing them from $10 to $29 per month for four years.

That would amount to nearly $1,400 in credits over that period.

Spanberger is also proposing a six-year freeze on residential base electricity rates, preventing rate hikes in that timeframe. The proposal would not freeze every component of a customer's electric bill, meaning fuel costs and other charges could still increase.

Her proposal also calls for changes to how certain electricity costs are allocated. Her expert says those changes would reduce residential customers' share of those costs by 25%.

Spanberger is also seeking stronger protections against electricity shutoffs and a separate clean energy company to serve large data centers that would be financially walled off from other customers.

"Dominion should establish a new, separate zero-carbon energy generation company (“GenCo”) to serve data center customers and other similarly situated large load customers, and thereby shield current ratepayers from generation cost overruns historically associated with nuclear power," the filing states.

Her expert recommended that the SCC reject the merger unless those additional commitments are substantially addressed or alternative solutions are identified.

"If anyone wants to call them moonshot, they're welcome to," Spanberger said. "However, I also think they are very real. They are very real requirements that I am putting forward because they have very real tangible benefits for Virginians."

CBS 6 reached out to Dominion Energy and NextEra about the new testimony.

In a joint response, the companies said the merger represents a "generational investment" in Virginia that would provide more than $2.1 billion in direct customer and community benefits, including bill credits, bill-payment assistance and workforce development.

The companies said the transaction would also create 1,000 new jobs and maintain Dominion's existing Virginia workforce for five years.

"The combination will also strengthen our ability to invest in reliability and critical infrastructure while helping keep energy affordable for Virginia families and businesses," the companies said.

Dominion and NextEra also said Dominion Energy Virginia would remain locally led, separately regulated and fully accountable to the SCC.

The companies said they are reviewing the filings and plan to address the issues through the commission's review process.

For now, both SCC staff and the Governor maintain that the merger has not met the standard for approval under its current terms.

The final decision on whether the deal moves forward, and what additional conditions could be attached to an approval, rests with the State Corporation Commission. A decision is expected by January.

This is a developing story, so check back with WTVR.com for updates. Email the CBS 6 Newsroom if you have info, photos or videos to share.

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