The companies are proposing a temporary $2.25 billion bill credit for Dominion customers to be spread out on monthly bills over the first two years of the agreement once the deal is officially closed
Dominion Energy and Florida-based NextEra Energy are proposing a merger to create the largest regulated electric utility in the country, hosting about 110 gigawatts of power combined.
If approvals from the slate of regulatory agencies are secured, it will mean the two companies would provide power to roughly 10 million customers across Florida, Virginia, North Carolina and South Carolina.
The plan is a stock-for-stock transaction, meaning that NextEra shareholders will own 74.5% of shares and Dominion shareholders will own 25.5%.
Off the bat, the companies are proposing a temporary $2.25 billion bill credit for Dominion customers to be spread out on monthly bills over the first two years of the agreement once the deal is officially closed. About 79% of that will be designated for Virginia customers.
“The bill credits we are committing to, the continued investments in generation, reliability and storm resiliency and our commitments to retain our team and dual headquarters in Juno Beach and Richmond, as well as Dominion Energy South Carolina’s existing operational headquarters in Cayce, reflect the values that have always defined Dominion Energy,” said Dominion CEO Robert Blue.
Dominion will remain in control of the infrastructure and customers they already own and service across the three states. This includes the 2.6 gigawatt Virginia Coastal Offshore Wind project, the largest of its kind in the county, which is slowly powering up and sending energy to the grid.
Dominion will still have to build out its energy portfolio to meet surging energy demands, largely driven by the proliferation of current and future data centers, as well as power needs across the regional grid, managed by PJM. The combined companies will have a future pipeline for large-load customers containing an estimated 130 GW of power.
Officials with both the companies said merging the two utilities will permit them to buy transmission and energy production infrastructure materials in bulk at a lower cost and boost their credit ratings. It could pay off for ratepayers in the long run, representatives said.
“It enables us to buy, build, finance and operate more efficiently, which translates into more affordable electricity for our customers in the long run,” NextEra Energy CEO John Ketchum said.
While NextEra will join forces with Dominion on a wide range of energy production sources, that will not translate to easing the pressure of rising energy demands Dominion is facing.
Dominion’s projections show power needs will double by 2045. The proposed merger will not change Dominion’s requirements under the Virginia Clean Economy Act, nor the build-out of other projects, such as a newly-announced mega gas plant proposed for Cumberland County.
Dominion officials said that their employees’ jobs will be secure for 18 months after the deal is finalized. Since NextEra and Dominion do not have overlapping operations currently, officials said the merger isn’t expected to reduce the Virginia-based company’s workforce.
The merger must be approved by company shareholders, the Federal Energy Regulatory Commission, the U.S. Nuclear Regulatory Commission, and all three states’ utility regulators, including Virginia’s State Corporation Commission. The plan must also survive a review of anti-trust laws at the federal level.
NextEra has courted expansion in the past, with attempts to purchase other utilities in Texas, South Carolina and Hawaii but those deals fell apart. Environmental advocacy groups such as Clean Virginia, who are staunch critics of Dominion’s policies, have warned regulators to be wary of the deal.
“Before Virginia ratepayers are locked into a relationship with NextEra Energy, every policymaker and regulator in the Commonwealth needs to understand what NextEra has done in Florida and ask hard questions about whether Virginians can expect anything different,” said Brennen Gilmore, executive director of Clean Virginia.
The approval process is expected to take about 12-18 months before the deal can be finalized.