New leaders give SCANA a chance to repair damage from failed nuke project

Criticized as uncaring and evasive in explaining its bungled nuclear project, SCANA finds itself scrambling to repair its battered reputation now that two of its top executives are leaving the utility.

To make amends with an upset public, the investor-owned utility needs to drop the secrecy that shrouds many of its decisions, make its leaders more accessible and, most of all, make good-faith efforts to give ratepayers relief from high energy bills tied to the nuclear project, lawmakers, community leaders and others said Tuesday.

SCANA’s future was on the minds of many in South Carolina on Tuesday, following news that Chief Executive Kevin Marsh and top nuclear official Steve Byrne were leaving.

Marsh will be succeeded by Chief Financial Officer Jimmy Addison. Byrne will be succeeded by Keller Kissam, a company executive popular with state lawmakers.

“There needs to be some contrition, that we are all in this together,” said state Sen. Mike Fanning, D-Fairfield. “They need to say, ‘We did help cause this mess, and we realize it is our responsibility to fix it.’ ”

The shakeup occurs as ratepayers and legislators seethe about customers being charged $1.7 billion for the V.C. Summer expansion project at Jenkinsville, northwest of Columbia. The company has said it wants to keep that money and possibly charge ratepayers up to $2.2 billion more for other costs incurred at the failed project.

That won’t fly with legislators.

“They’re going to have to accept the consequences for their decisions and their actions in Jenkinsville,” said state Rep. Micah Caskey, R-Lexington. “They’ve got a responsibility to eat those costs and stop trying to pass them on to ratepayers.”

Those ratepayers already pay the highest residential power bills in South Carolina, higher than Duke Energy or the state-owned Santee Cooper utility, according to the state Office of Regulatory Staff.

From pillar to pariah

SCE&G, SCANA’s main subsidiary, long was considered a pillar of the Columbia community, donating money to charities, maintaining Lake Murray and having employees speak at schools. The company also is one of South Carolina’s major employers – with 6,000 workers, many in the Columbia area.

However, SCANA’s reputation suffered mightily as people learned the nuclear project was over budget, behind schedule and in jeopardy after its chief contractor, Westinghouse, filed for bankruptcy. The utility also kept secret from regulators and legislators a February 2016 report that outlined critical problems with the project.

“In just a year’s time, we’ve watched a company that South Carolina was proud of – as being one of our own – now become the butt of jokes,” said Fanning, whose district includes the V.C. Summer project site. “They have got a lot of work to do to restore the name.”

Legislators said they hope Addison and Kissam will be more upfront with the public and them when they take over at SCANA early next year.

Others, who regularly deal with SCE&G on issues other than the nuclear plant, have the same hope.

Congaree riverkeeper Bill Stangler, for example, said the utility misled him on how it would deal with toxin-riddled coal tar that drained from the utility’s property into the Congaree River.

“Transparency is one of the biggest things they need to improve on,” Stangler said.

As for the nuclear project, S.C. lawmakers did not find Marsh and Byrne remorseful in House and Senate hearings about the project’s demise.

Over hours of testimony, SCANA leaders repeatedly answered pointed questions about the construction project’s problems with assurances that the utility’s actions had been “prudent” and were taken with customers in mind.

Marsh and Byrne laid the blame for the project’s failure on Westinghouse. SCANA and partner Santee Cooper walked away from the project July 31 after spending $9 billion and nearly a decade on the effort. That left more than 5,000 people out of work and ratepayers still paying for a project that would not be completed.

“At no point have I heard y’all own any significant portion of the blame for the failure to deliver the project on time or on budget,” state Rep. Kirkman Finlay, R-Richland, told SCANA’s executives during a Sept. 15 hearing.

‘They want to fix it’

State Sen. Shane Massey expressed hope that Addison and Kissam will make the needed changes.

“Ultimately, a change in leadership doesn’t matter unless there’s a change in direction,” the Edgefield Republican said. “I do think, based on my conversations with them, that Jimmy Addison and Keller Kissam get it. They understand. But there are still a lot of problems to fix and a long way to go.”

Lawmakers on Tuesday singled out Kissam, a Citadel graduate, as straightforward and responsive, adding he had little – if anything – to do with the V.C. Summer project’s failure.

They were more hesitant to laud Addison, who was already on SCANA’s executive team, but said he is bright and easily can explain the company’s finances.

“He’s got to demonstrate that he’s going to lead differently than the others,” Massey said. “If he doesn’t, that will be a problem.”

State Rep. Russell Ott, D-Calhoun, said he has known Kissam, who grew up near Ott, for years.

“I can speak personally for the type of man that he is,” Ott said. “He is a people person and is understanding of everything the customer is going through.”

Massey said rank-and-file SCE&G employees respect Kissam.

“Keller, especially, is extremely embarrassed by what has happened – and Jimmy as well,” Massey said. “They want to fix it. The question is whether they can. I don’t know. … Keller is passionate about the employees and the people who go to work every day to keep the lights on.”

‘No other issue ... more important’

Financial analysts said the departures of Marsh and Byrne created uncertainty that caused the company’s stock to drop Tuesday.

But they also noted the changes did not involve bringing in outsiders to run SCANA, which indicates the utility remains in reasonably good shape despite its difficulties. Some said the company’s stock price – down $2.76 a share Tuesday to close at $43.13, more than $30 below its 52-week high – likely will rebound.

“I don’t think this is something that investors need to be particularly concerned about,” said Travis Miller, an analyst with Morningstar.

Miller said the major issue for investors is how much SCANA will be allowed to recoup for its costs at the failed project.

“There is no other issue now that is more important to the value of the company in the near term than the resolution of their nuclear investment,” Miller said.

This story was originally published October 31, 2017 at 5:20 PM with the headline "New leaders give SCANA a chance to repair damage from failed nuke project."