McMaster orders Santee Cooper to turn over documents

Gov. Henry McMaster ordered the state-owned Santee Cooper power company Monday to cooperate with criminal investigators and turn over records of the bungled V.C. Summer nuclear project in Fairfield County.

McMaster’s letter to Santee Cooper board chairman Leighton Lord includes a demand that the utility give “any and all’’ records to both the governor’s office and the investigating agencies.

McMaster, who is trying to sell Santee Cooper to another utility, has been critical of the state power company over its failure to release a report that outlined extensive problems with the construction project long before the public knew about it. Santee Cooper for years urged partner SCE&G to make changes in the failing project, but SCE&G and Santee Cooper kept the report hidden from public view until McMaster demanded a copy last month, The State reported in September.

Now, McMaster’s office says the governor wants to make sure Santee Cooper releases everything that could enlighten investigators, as well as the governor’s office, said McMaster spokesman Brian Symmes. Both federal and state criminal authorities are looking into the failed project.

“Throughout the process of the V.C. Summer project we’ve seen that both partners quite frankly weren’t exactly forthcoming,’’ Symmes said. “The governor wanted to make sure to pre-empt any possible reluctance to comply with investigators. It is within his authority to do so.’

McMaster said failure to comply with his request would constitute “malfeasance, misfeasance or misconduct,’’ wrongdoing that could allow the governor to fire the Santee Cooper board that Lord chairs. Lord has contributed to the campaign of Catherine Templeton, who is running against McMaster in next year’s Republican gubernatorial primary.

Lord and Santee Cooper spokeswoman Mollie Gore said the utility would comply with McMaster’s request, but that Santee Cooper had tried to provide everything that has been sought.

“We are cooperating with every investigation we know of,’’ Lord said.

The failed Summer nuclear project has created an uproar in South Carolina. SCE&G, the senior partner, and Santee Cooper announced July 31 they would stop building the project after spending $9 billion and working on the effort for about a decade. When the project shut down, it left more than 5,000 people out of work and power customers incensed. The two companies have charged their customers about $2 billion for the twin-reactor project northwest of Columbia, raising rates a combined 14 times. The average SCE&G customer is paying about $27 per month for a nuclear expansion project that now will not be built.

The two power companies blamed the bankruptcy of chief contractor Westinghouse as a key reason for abandoning the effort.

A federal grand jury is investigating. So is the S.C. Attorney General’s office, the State Law Enforcement Division, and two State House committees.

Monday’s demand by McMaster follows Santee Cooper’s release last week of about 1,000 pages of documents to the governor’s office.

Included in the records was a 13-page cover letter by Santee Cooper general counsel Michael Baxley that outlined the company’s efforts to kick start the failing project.

Records show Santee Cooper had been trying for at least three years to make improvements to the nuclear construction effort, including hiring an independent manager, but SCE&G resisted, The State reported Sept. 7.

In the Sept. 27 letter to McMaster, Santee Cooper indicates that it repeatedly pushed senior partner SCE&G to hire an outside firm to review the failing construction project, then pressed SCE&G to enact recommendations from that external audit, which was conducted by the Bechtel Corp.

Santee Cooper's letter to McMaster also included an assessment of Santee Cooper and SCE&G's attempts to correct problems outlined in the Bechtel report. Improvements were made in several areas of the project, but those efforts failed to solve many lingering problems, the letter indicates.

Emails referenced in that letter show Santee Cooper executives were not satisfied that SCE&G had failed to hire an independent manager — a key recommendation of the February 2016 Bechtel report.

In a November 2016 email to SCE&G chief executive Kevin Marsh, Carter argued that SCE&G's project management team did not have the comprehensive skills or experience needed to complete a project of that scale.

SCE&G executives disagreed that the project needed an outside manager. They instead vowed to hire more experienced on-site employees. SCE&G also created a Construction Oversight Review Board, a group of nuclear industry experts that ultimately met twice and produced two reports echoing Bechtel's concerns.

The Bechtel report "was sufficient for Santee Cooper to recognize the need (for) on-board experts' help to work on key issues and improve the management of the project," Santee Cooper senior vice president Michael Crosby wrote to SCANA senior vice president Jeff Archie in June 2016.

That email got no response, according to Santee Cooper's letter to McMaster.

Months later, Carter wrote to Marsh that "I am concerned that we learn critical information too late from an outside team that comes in quarterly for a few days, which should have been brought to our attention by our teams."

"After three years of project delays, and now another five months of Unit 2 delay realized in 2016 — there should be no shame in reaching out for qualified assistance," Carter wrote.

Santee Cooper continued to ask about the need for increased project management through February 2017, a month before lead contractor Westinghouse filed for bankruptcy.

This story was originally published October 2, 2017 at 7:42 PM with the headline "McMaster orders Santee Cooper to turn over documents."