Ratepayers get $520 million settlement in nuclear failure case against Santee Cooper

A state circuit court judge on Monday approved a $520 million settlement to end a legal action alleging deceptive business practices against Santee Cooper, the state-owned utility that provides electricity to approximately 1.7 million customers.

The class action civil lawsuit approved by Judge Jean Toal stemmed from the July 2017 failure of an abandoned joint venture by Santee Cooper and the former publicly traded SCANA to build a $10 billion nuclear power plant at the V.C. Summer nuclear station in Fairfield County.

Nearly all of Santee Cooper’s 1.7 million residential, commercial, industrial and other customers will receive some kind of cash payment after about 90 days as part of the settlement, lawyers connected to the case said. If a customer’s refund is less than $25, they will receive a credit on their bill.

“This settlement is fair and adequate and quite a win for the ratepayers in the plaintiff class,” Toal said near the end of the nearly four-hour hearing at the Richland County courthouse. Because of the coronavirus, the more than 20 lawyers and others at the hearing wore masks and were seated apart from each other. Judge Toal wore a clear plastic face shield.

The agreement also requires Santee Cooper not to raise electric rates for the next four years.

Since every ratepayer uses different amounts of electricity, it was not possible Monday to estimate how much money any given electric customer might receive.

However, one of Santee Cooper’s largest customers, Century Aluminum, will receive an approximate $7 million payment, lawyers said at the hearing. The company, which operates an aluminum smelter in Mt. Holly, uses huge amounts of electricity.

Dominion Energy, which acquired SCANA and the former Cayce-based utility’s customer base after the company’s stock price tanked after the nuclear failure, will pay $320 million of the $520 million. Santee Cooper will pay the remaining $200 million, under the settlement agreement.

Neither Santee Cooper nor Dominion admitted any fault in the case. They settled in order to put an end to the uncertainty of a trial, documents said.

According to the lawsuit in the case, Santee Cooper chose to charge its ratepayers over the years for ongoing construction costs in the never-completed nuclear project. As time passed, the lawsuit said, Santee Cooper became aware “that the nuclear project was not viable” and had “known for years that the project was mismanaged and failing.” Despite that knowledge, Santee Cooper kept passing on construction costs to ratepayers, the lawsuit said.

Earlier this year, Toal told lawyers in the case that she was planning to hold a three-week jury trial if they could not agree on a settlement. No one can predict what a jury might do — it might have given the plaintiffs far more than $520 million or nothing at all. And whichever side lost, Judge Toal said, was sure to appeal, running up more legal fees and expenses on both sides.

At a trial, plaintiffs’ lawyers would have produced evidence and witnesses in an effort to show that Santee Cooper deceived its ratepayers. Santee Cooper would have contested that evidence. The settlement deprives the public of the opportunity to see details of the court case that would have been brought against the utility.

Of Monday’s $520 million settlement, lawyers representing the plaintiffs will get 15%, or approximately $77 million in legal fees. That $77 million will be split among 10 law firms, depending on how much work each did on the case. The 15% amount is on the low end of standard fees in this type of lawsuit, lawyers said.

Judge Toal, perhaps mindful that such a large legal fee might raise eyebrows in the public, took pains to elaborate at length on why the lawyers were worth that much.

First, she said, only a relatively few lawyers in South Carolina are qualified to bring and handle a case of such great complexity. The plaintiffs’ lawyers also took an enormous risk in bringing the case against equally qualified and determined lawyers representing Santee Cooper and Dominion, SCANA’s successor company, she said. Lawyers who brought the case were doing it on speculation, meaning they wouldn’t get paid unless they won.

“I don’t believe I ever participated in a piece of litigation that had as many complexities as this one did,” said Toal, a retired State Supreme Court chief justice who has been a lawyer for 52 years.

Law firms receiving the largest shares of the $77 million fee were:

▪ Speights and Solomons of Hampton County, which will get an estimated $14.6 million. Gibson Solomons was a lead attorney for the plaintiffs.

▪ The Strom Law Firm of Columbia, which will get $14.4 million. Lawyers who worked on the case included Pete Strom, Bakari Sellers, Jessica Fickling and John Alphin.

▪ Savage, Royall & Sheheen of Camden, which will get $10.2 million. State Sen. Vincent Sheheen is a member of this firm.

▪ Richardson, Patrick, Westbrook & Brickman, which has offices around the state, will get around $11.3 million. Terry Richardson was a lead lawyer on the case.

▪ McGown, Hood & Felder of Mt. Pleasant, which will get about $13 million. The firm’s Jay Ward is a lead lawyer on the case.

The settlement puts an end to one of the last remaining legal actions to arise out of the abandoned nuclear venture. SCANA, and its successor company, Dominion, are having to pay out several hundred million dollars as a result of settlements in investor and ratepayer lawsuits.

Earlier this month, SCANA successor Dominion settled an investor lawsuit in federal court, agreeing to pay out $192.5 million to investors who lost money on their shares because of the nuclear failure. Plaintiffs’ lawyers in that case will split about $30 million.

Last June, SCANA and Dominion settled a class action ratepayer lawsuit that included up to $2 billion in future rate relief, as well as a $115 million cash component. Lawyers split about $51 million in fees in that case.

Federal authorities are conducting an ongoing criminal investigation against SCANA officials in the nuclear failure. One official, Stephen Byrne, is slated to plead guilty in federal court to criminal conspiracy fraud charges later this week.

The ill-fated nuclear fiasco led to SCANA’s demise. It was one of the greatest business failures in South Carolina history. SCANA was once one of the crown jewels in the state’s economic landscape, employing thousands and having its shares publicly traded on the New York Stock Exchange.

Santee Cooper released a statement later Monday. It said, “We are glad to be at this point in the settlement process and appreciate the Court’s swift decision. This settlement is good for our customers, and Santee Cooper is taking the steps necessary to move forward.”

This story was originally published July 20, 2020 at 6:22 PM.