As criticism over a failed nuclear project spreads across South Carolina, there are plenty of questions about whether SCANA chief Kevin Marsh has a future at the investor-owned energy company.
Some public interest advocates and politicians — most notably state Sen. Mike Fanning — say Marsh and other top executives should quit after presiding over one of the biggest construction failures many people have witnessed in South Carolina. Others stop short of calling for Marsh’s resignation, but they expect it.
Speculation surfaced this week that Marsh will leave the utility sometime in the fall. SCANA said Marsh wants to stick with the company while it seeks to resolve how to formally end the nuclear construction effort in Fairfield County.
“He should resign,’’ said Fanning, whose district includes the failed project site. “He has not provided the leadership on the project he was in charge of.’’
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If Marsh quits or is replaced at SCANA, he would become the second utility executive to resign in the wake of the $9 billion V.C. Summer nuclear fiasco. Project partner Santee Cooper’s chief officer, Lonnie Carter, said last month he would retire following a barrage of criticism.
“We need fresh eyes,’’ Fanning said.
Fanning, D-Fairfield, has been one of the most vocal critics of SCANA and SCE&G, the company’s electricity producing subsidiary, since learning of the project cancellation July 31. When the plant shut down, more than 5,000 people lost their jobs, and SCE&G customers wondered if they would get back the $1.7 billion they’d already paid for the project.
For years before the abandonment, utility company officials repeatedly expressed optimism about progress on the V.C. Summer expansion, which involved building two reactors to complement the site’s existing one. Construction started about five years ago, after more than four years of planning. When the project shut down July 31, construction was about one-third complete. Collectively, SCE&G and Santee Cooper spent about $9 billion. They blamed their decision to quit on the bankruptcy of lead contractor Westinghouse and challenges that could ultimately have doubled the $11 billion price tag.
Rep. Bill Crosby, R-Charleston, said he began to think the project was in trouble several months before it was abandoned — and responsibility for the failure falls on top SCANA executives. The company’s SCE&G division was the senior partner on the project, with a 55 percent share.
Crosby and Fanning said SCE&G needs new leadership. They said they are particularly upset that top executives at SCANA and Santee Cooper received bonuses while the project was failing.
“The top three to four should resign,’’ said Crosby, who named Marsh but did not mention others by name. ”They all got bonuses. Santee Cooper got bonuses. And the whole time things were just falling apart.’’
Marsh, an accountant who rose through the ranks at SCANA during a 33-year career, earns more than $6 million in total compensation as chief executive officer and board chairman. The Atlanta native is among a handful of high-ranking SCANA executives who have collectively received $21.4 million in performance-based bonuses during the past decade, a time in which the nuclear project was being planned and built.
In addition to Marsh, those receiving bonuses included chief financial officer Jimmy Addison and executive vice president Steve Byrne.
Marsh was not made available for an interview with The State, but the company did say that Marsh and other executives remain dedicated to SCANA and its customers. SCANA has said it wanted to charge ratepayers over the next 60 years to cover costs the company has incurred and provide a return to stockholders. Resolving that issue could take months.
“Kevin Marsh and other members of the SCANA executive leadership team remain committed to leading SCANA through resolution of the prudent decision to end construction of our new nuclear project,’’ company spokeswoman Rhonda O’Banion said in an email. “Under Kevin’s leadership, they intend to work with the legislature, regulatory bodies and other stakeholders on a solution that is in the best interest of our customers.’’
O’Banion said SCE&G officials “remain dedicated” to providing reliable energy to families and businesses.
Columbia area lawmakers Kirkman Finlay and Nikki Setzler remained unconvinced that SCANA will retain its current leadership. Both serve on legislative committees looking into the company’s decision to abandon the project.
“If losing $9 billion doesn’t cost you your job, what does?’’ asked Finlay, a Republican House member from Richland County.
Democrat Setzler, a veteran senator from Lexington County, said it’s up to the SCANA board to decide if Marsh should be shown the door since the Legislature has no authority over the utility. But Setzler said he suspects that Marsh’s tenure at SCANA is near an end. Setzler co-chairs the Senate committee investigating the project shutdown.
“I can tell you most major companies, if they had this situation, would certainly be looking at making changes,’’ Setzler, a senator since 1977, said. “I would be surprised if changes are not made. This thing gets worse by the day. This situation is not good and we have to get to the bottom of it. This is the biggest business issue I’ve seen come up in my service’’ in the Legislature.
Government watchdog John Crangle, who is with the S.C. Progressive Network, said Marsh and other executives may not have a choice of whether to resign.
“If they don’t resign, my guess is the board of directors — under pressure from the shareholders — will force them out,’’ Crangle said. “This was an extremely risky project from the get-go. They knew no nuclear project had been built in the United States for some 30 years. And they knew, or should have known, there was no company in the United States with the institutional memory that could build it.’’
What effect a resignation by Marsh or other top executives would have on company stock prices was not known last week. Analysts were reluctant to speculate publicly, but one New York analyst who asked not to be named said a management shakeup could hurt stock prices initially.
SCANA’s stock has recently traded at a 52-week low, and analysts say it is not doing as well as other energy companies. On Friday, SCANA’s stock closed at $60.14, down 24 cents from Thursday. The 52-week low is $59.34.
By national standards, SCANA is a relatively small energy company. Its major division is SCE&G, the electric utility serving much of the Columbia and Charleston areas. SCE&G has more than 700,000 customers.
Marsh, whose public persona is friendly and even-tempered, can’t be blamed for the entire nuclear debacle, legislators said. While he presided over the decision to abandon the project, his role in leading the effort didn’t begin until 2011. That’s when he was named chief executive, replacing long-time SCANA chief Bill Timmerman, a champion of the project from the beginning. The Nuclear Regulatory Commission issued a license for the project in March 2012.
State Sen. Greg Gregory, R-Lancaster, said the failure of the project ultimately involves more than just SCE&G and Marsh. The Legislature approved a law making it easier for the company to raise rates to pay for the work. Gregory was one of the sponsors of that law, called the Base Load Review Act.
“It seems like the line should have been drawn by Santee Cooper, SCE&G and the Legislature, with better oversight from the Public Service Commission,’’ Gregory said.
Still, Fanning said Marsh could have let the public know of problems at the site after he took over for Timmerman.
Fanning said he’s particularly upset that Marsh and his colleagues for years did not tell state policy makers or the Fairfield County community that the project was in danger of being shut down. On July 18, just weeks before the July 31 announcement to abandon the effort, Marsh told Fanning the V.C. Summer expansion was progressing, Fanning said.
“Two weeks before the abandonment plan, I was touring the site and Marsh and the other people were telling me how pleased they were,’’ Fanning said. “They got us extremely excited about it, and two weeks later, they proposed to abandon it.’’