Virginia Governor Demands Six-Year Rate Freeze as Regulator Staff Recommend Denying NextEra-Dominion Merger

Virginia Gov. Abigail Spanberger has said she remains deeply skeptical that NextEra Energy's proposed $67 billion merger with Dominion Energy, as currently structured, will adequately protect consumers. She has asked the State Corporation Commission (SCC) to reject the deal unless the companies agree to a six-year freeze on residential base rates and triple the proposed monthly bill credits. The governor does not vote on the merger; the SCC decides.

The commission's own staff has taken a hard line too. In testimony reported on Oct. 19, staff concluded that the merger as proposed in the joint petition should be denied, while setting out 57 conditions they would accept instead, 25 of which were already in the companies' proposals. The rate freeze is the governor's demand, not one of the staff conditions.

The all-stock deal, announced in May and valued at about $66.8 billion, gives Dominion shareholders 0.8138 NextEra shares per share. Dominion stock jumped 9.4% on the announcement while NextEra fell 4.6%. Approvals are also pending in North Carolina and South Carolina, and the companies had targeted closing within 12 to 18 months.

For NEE and D, the political and regulatory pressure in Dominion's largest market raises the cost of getting the deal done, and a six-year freeze would cap the regulated earnings growth that justified the price. The SCC holds public hearings on Nov. 5, 9 and 10 and an evidentiary hearing on Nov. 17; watch whether the companies offer concessions before then.