Santee Cooper in hot water over refusal to release report on failed nuke project

Santee Cooper’s refusal to release a report on its failed nuclear construction project near Columbia sparked an outpouring of criticism over the weekend and promises by politicians to force the state-owned utility and its partner to give up the document.

Sen. Nikki Setzler, co-chairman of a committee investigating the bungled nuclear project, said the panel would issue subpoenas by Tuesday for the report, written by the Bechtel Corp. Santee Cooper and senior partner SCE&G walked away from the nuclear reactor project after charging ratepayers more than $2 billion.

Meanwhile, Republican Gov. Henry McMaster indicated that he would attempt to remove members of the Santee Cooper board if the agency did not give him the report. And Rep. James Smith, D-Richland, who said he’s frustrated that Santee Cooper won’t release the report, said he will file a motion with the Public Service Commission this week to force SCE&G to produce the document.

Setzler, D-Lexington, said he spoke Sunday afternoon with Senate president pro tem Hugh Leatherman, R-Florence, and the investigative committee’s co-chairman, Shane Massey, R-Edgefield, about Santee Cooper’s refusal to release the report.

“If they are not going to give them to us voluntarily, we are going to seek them by subpoena,’’ Setzler said. “The public has a right to know what has happened in this situation. And we have a right to know to protect the ratepayers and the public of South Carolina.”

Santee Cooper says it is reluctant to release the report without SCE&G’s consent and because the document could hurt its defense against lawsuits. The utility did give the governor’s office a five-page report that it said highlighted some concerns, but McMaster said that isn’t enough.

In a letter Saturday to Santee Cooper attorney Mike Baxley, McMaster said state law requires Santee Cooper to produce the Bechtel report that he is seeking. McMaster’s letter said failing to do that would “constitute misfeasance,’’ a possible reason that would give the governor authority to remove board members.

“I will not allow secrecy and suspicion to stand in the way of solutions,’’ McMaster’s letter said.

Santee Cooper is governed by an 11-member board that the governor appoints. Under state law, the governor can remove board members, but only under certain circumstances.

At issue is a report that, by all accounts, contains stinging criticism of efforts by Santee Cooper and SCE&G to build two nuclear reactors at the V.C. Summer site at Jenkinsville, where one reactor already exists.

Santee Cooper and SCE&G had been planning and building the project for nine years before walking away July 31. The power companies said they were quitting the project because chief contractor Westinghouse filed for bankruptcy and costs were escalating far above the original projection of about $11 billion.

As of July 31, construction at the site was about one-third complete. Collectively, the companies spent $9 billion.

The Bechtel report, written about two years ago, was commissioned by the utilities to critique the project as problems arose. Upon learning about the report, state lawmakers said two weeks ago they would subpoena the power companies for it, but Setzler said his committee had not yet done so. House and Senate committees are investigating why the project shut down.

SCE&G, the project’s senior partner, has declined to release the Bechtel report, saying the document should remain confidential because it contains secrets shared between an attorney and a client.

While Santee Cooper board chairman Leighton Lord said Friday that he wants to release the Bechtel report, he questioned whether that was possible without SCE&G’s approval. The same day, Baxley wrote McMaster to say the agency would not give up the report. Baxley’s letter said Santee Cooper did not want to release the document because the agency is being sued over the failed nuclear project.

The letter also said SCE&G “objects to the release of the Bechtel document.’’

Releasing the report to McMaster “would be extremely harmful to (Santee Cooper) in its efforts to defend any and all litigation filed against it,’’ Baxley wrote. “In turn, this could diminish the overall value of the authority for purposes of sale .... and have a negative impact on the authority’s ratepayers.’’

Baxley offered to have a judge decide whether the report should be released — a proposal that McMaster flatly rejected.

“I have no intention of asking the judicial branch for permission to review a document to which I am rightfully entitled by law,’’ McMaster wrote.

Despite Santee Cooper’s failure to produce the report, the utility did give McMaster five pages of a company document that identified substantial concerns about the V.C. Summer project in 2016. The five pages said new project management and leadership were needed “to overcome’’ challenges at the construction site.

Santee Cooper and SCE&G “have an opportunity to make significant correction to the course of the nuclear construction,’’ the document from Santee Cooper said.

“There is a window for the owners to impose project changes designed to offset current critical path material delays and poor construction performance attributed to inadequate project integration and management, incomplete engineering and rework associated with the ongoing design alteration,’’ according to the five-page document Baxley gave the governor.

Critics said the Bechtel report still needs to be released.

“They are hiding something,’’ state Sen. Paul Campbell said of Santee Cooper. Campbell, a Berkeley Republican who formerly served on the Santee Cooper board, said the Bechtel report should “let us know what you know and when you knew it.’’

Government watchdog John Crangle, who monitors state policy for the S.C. Progressive Network, said Santee Cooper doesn’t want to release the report because it is potentially damaging.

“Apparently, they are trying to delay as long as possible the revelations in the Bechtel report,’’ Crangle said. “I suspect the Bechtel report is absolutely devastating.’’

McMaster’s office had no immediate comment Sunday, but Crangle said the governor told him he has evidence to justify removing Santee Cooper board members if necessary. Crangle said he spoke with McMaster about the issue Sunday.

Crangle said the agency might as well give up the report because it will have to release the document to other attorneys suing the agency.

“They are just paralyzed by indecision and fear right now,’’ Crangle said of Santee Cooper. “There is no way in the world this Bechtel report can be hidden from the governor and litigants and the (legislative) committees. It is going to come out and it is going to be an absolute atomic bomb.’’

This story was originally published September 3, 2017 at 6:07 PM with the headline "Santee Cooper in hot water over refusal to release report on failed nuke project."