When SCANA won its long-sought federal license for a massive nuclear expansion project in Fairfield County, it could have had the form mailed to the company’s Cayce headquarters.
Instead, SCANA leaders celebrated the March 2012 issuance of the license by piling into two company planes and flying to retrieve it in person from the U.S. Nuclear Regulatory Commission in Maryland, state regulators told The State this week.
The company listed the $14,000 cost of that trip among its operating expenses for the now-abandoned nuclear project, claiming the expense as justification to raise the electricity rates of its customers.
The trip was one of more than 40 SCANA expenditures – worth nearly $213,100 – the S.C. Office of Regulatory Staff disallowed, deeming them excessive or inappropriate to be charged to the company’s customers.
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While the agency struck the charges from SCANA’s rate-hike requests, short-staffed regulators acknowledge they could have missed other inappropriate receipts or invoices that were not reviewed during their random audits.
The agency’s largest catch was $198,000, which SCANA paid for consulting services and listed on its 2016 rate-hike request. Auditors disallowed the expense because they say SCANA was unable to provide documents showing what work the unnamed consultant had done.
SCANA said Wednesday that consultant was the utility’s former chief executive officer, Bill Timmerman. “After discussion with the ORS, we agreed not to seek recovery of that amount,” a utility spokesman said.
Among other SCANA expenditures that Regulatory Staff ruled out:
▪ $1,727 for a limousine service that ferried SCANA employees from an airport to the U.S. Nuclear Regulatory Commission for hearings. It wasn’t the dollar amounts that caught auditors’ attention, but the limo company’s name, which hinted at luxury: “British Jaguar Sedan Service.”
▪ At least $455 in alcohol, mostly for employees’ meals
▪ $343.75 in gift cards SCANA used to reward good work. (Regulators took the position that those employees already were being paid a salary to perform well.)
▪ A $57.19 outing to a Bailey’s Sports Grille to celebrate an employee’s retirement
▪ And a $23.91 trip to Hooters.
“They were unable to provide a business purpose for why they were at Hooters,” said Kelvin Major, an audit manager in Regulatory Staff’s nuclear division.
SCANA is “100 percent in agreement with the ORS’ decision to disallow the expenses,” a spokesman said Wednesday, adding almost all the disallowed expenses occurred before 2013.
“That’s noteworthy because, in late 2012, we identified a need to provide better training to employees regarding the proper coding of expenses to ensure customers are charged only for costs that are directly related to providing them with safe, reliable service,” the spokesman said. “Whenever an improperly coded expense is identified ... we follow up with corrective actions regarding the specific expense and the individual employee(s) involved.”
The utility’s expenses disappoint state Rep. Russell Ott, D-Calhoun, vice chair of the S.C. House committee investigating the failed nuclear project.
“It’s the principle of it,” Ott said. “It’s just a small snapshot into the mentality of some of the decision-makers and leaders within the organization.”
The charges were included in SCANA’s justification for its rising nuclear construction costs. The utility sought and received nine rate hikes from state regulators – worth $1.7 billion so far – to finance those construction costs.
In response to concerns about the plane trip by Regulatory Staff auditors, SCANA wrote that corporate planes are more efficient than commercial flights.
“For example, many of the airports accessible to a corporate aircraft are in locations that will not accommodate a commercial aircraft and are generally closer to the location of the actual business being conducted,” the company wrote to Regulatory Staff.
Companies that complete the grueling, years-long nuclear licensing process commonly send a contingent to the Nuclear Regulatory Commission’s Maryland office to pick it up, an NRC spokesman said Wednesday.
The questionable nuclear expenditures were not SCANA’s first expenses to fall victim to routine audits.
In 2012, Regulatory Staff found the utility’s proposed 6.61 percent rate hike ultimately would pay for Zumba classes for SCE&G employees and a private club on Sullivan’s Island, the Charleston City Paper reported then.
While sorting through piles of nuclear invoices and receipts, Regulatory Staff staffers check that each expense has a valid business purpose and was filed correctly.
The auditors flag large dollar amounts and search for any evidence customers are being made to pay for lobbying expenses, charitable donations, penalties and fines, alcohol, employee club memberships, or lavish or extravagant expenses.
In 2012, Regulatory Staff struck the $27.50 that one SCANA employee had spent on a flight upgrade – meant to save the employee at least three hours of travel time.
It also docked from SCANA’s construction costs the 34 percent tip an employee left for a meal and the $79 that an employee spent to attend a Midlands Technical College seminar with no relevance to the nuclear project.
The agency also eliminated promotional costs.
In 2012, regulators targeted the $1,600 that SCANA had spent to host a media photo tour of the V.C. Summer construction site, records show.
And, in 2015, the agency struck the nearly $470 that SCANA had spent on two picture frames that housed large photos of the Fairfield County site. The photos were meant to illustrate progress on the construction of two new nuclear reactors.
Today, they have been abandoned as too costly.