SCE&G failed to heed Santee Cooper warnings at bungled nuke project, records show

The V.C. Summer nuclear plant has one reactor. Two others were planned, but utilities dropped the effort one-third of the way through construction.
The V.C. Summer nuclear plant has one reactor. Two others were planned, but utilities dropped the effort one-third of the way through construction.

For parts of three years, the Santee Cooper power company urged partner SCE&G to address growing problems with the utilities’ failing nuclear expansion project — but SCE&G was either slow to respond or failed to comply with the requests, records show.

As far back as May 2014, Santee Cooper told SCE&G the companies needed help from an independent manager to oversee the V.C. Summer reactor project northwest of Columbia, according to documents released Thursday by the state-owned power company.

But Santee Cooper, the junior partner in the construction effort, expressed frustration in November 2016 about “why this has not yet been done.’’

A Nov. 28, 2016, email from Santee Cooper executive Lonnie Carter to SCANA’s top executive, Kevin Marsh, questioned the company’s ability to handle the multi-billion dollar project. SCE&G is a division of SCANA.

“SCANA’s project management team …. does not have the comprehensive skills and depth of experience necessary in engineering, scheduling, project controls and construction to manage a large new build project with complexities,’’ according to an attachment to the November 2016 email.

SCE&G was the project’s senior partner with 55 percent ownership. It largely drove the effort and most of the utility company workers on site were from SCE&G.

Carter’s 2016 email said the effort needed independent managers, who could identify areas for improvement and keep track of progress at the nuclear construction site. He questioned whether a part-time oversight board, seated by SCE&G, could keep up with problems.

Santee Cooper also pushed in March 2016 for outside bankruptcy attorneys because of concerns about the financial health of Westinghouse and its parent, Toshiba, records show. Such a lawyer would help the companies determine how Toshiba’s difficulties could affect Westinghouse and the utilities, the attachment to Carter’s email said. A year later, Westinghouse filed for bankruptcy.

Also, Santee Cooper urged last year that SCE&G agree to release a Bechtel Corp. report critical of the nuclear project to the state’s electric cooperatives, the state-owned company’s major customers. In both cases, SCE&G resisted, the email said.

Carter’s correspondence with Marsh, released in response to a request from The State newspaper, provides new insight into the rising – but little known – problems plaguing the ambitious reactor project in rural Fairfield County. Since efforts to build the two reactors started more than a decade ago, both companies had expressed optimism that the twin reactors would be completed.

SCE&G finally conceded this past March that the project was in trouble after chief contractor Westinghouse filed for bankruptcy. SCE&G and Santee Cooper quit the project July 31 after collectively spending $9 billion on the effort. They have charged customers more than $2 billion for the unfinished reactors, and SCE&G said at one point this summer it wanted to charge customers at least $2.2 billion more to shut down the project. The state Public Service Commission would have to approve the extra charges.

Both companies cited Westinghouse’s bankruptcy, rising costs and less demand for power as reasons they were quitting the project. Construction is about one-third complete.

Neither SCE&G nor Santee Cooper would comment Thursday, but Santee Cooper’s records show a constant back-and-forth between the two companies over the progress of construction and secrecy surrounding the work.

That was evident in the Carter email, which said he was under pressure from the Santee Cooper board to resolve issues with SCE&G that had lingered for months, and in some cases years. His email to Marsh said a failure to resolve efforts to obtain a bankruptcy lawyer and improve project management “have become items of frustration for Santee Cooper.’’

They “have put me in an awkward position with my board, who are insisting to know why no action has been taken,’’ Carter wrote to Marsh.

Carter’s November 2016 said SCE&G had not agreed to release a report critical of the project to Santee Cooper’s biggest customers, the state’s electric cooperatives. He said he felt “backed into a corner’’ because cooperatives were seeking a copy of the report.

“Not releasing the information will likely bring formal requests that will be an untenable position for both our companies,’’ Carter wrote.

After being pressured by Gov. Henry McMaster last weekend, Santee Cooper released the Bechtel report Monday. The report outlined an array of troubles at the nuclear construction site long before the July 31 decision to quit the project. The Bechtel study said the Summer nuclear project suffered from flawed construction plans, faulty designs, inadequate management of contractors, low worker morale and high turnover.

The records released Thursday also indicate that SCE&G and Santee Cooper knew well before Westinghouse’s March 2017 bankruptcy that the company was in financial trouble. On March 21, 2016, the day Santee Cooper and SCANA’s governing boards met to discuss Toshiba, the state utility asked that a bankruptcy lawyer be retained, records show.

Meanwhile, one June 18, 2016, email from Santee Cooper questions why SCANA wanted to continue studying problems with the nuclear project when action was needed. It says one study conducted in 2015 for $1 million “was sufficient for Santee Cooper to recognize the need (for) onboard experts to help to work on key issues and improve management of the project.” Carter’s November email said. SCE&G never responded to the June message. Carter’s email didn’t state clearly which report he was referring to.

Carter’s email said the project had been hurt by “an incompetent engineering firm’’ and a “disingenuous contractor.’’