Dominion buys out SCANA: How we got here
SCE&G executives misled S.C. legislators about why a report was commissioned to investigate troubles at the failing V.C. Summer nuclear expansion project, state regulators say.
In sworn testimony to lawmakers last fall, Kevin Marsh, then chief executive of SCE&G and its parent company SCANA, told legislators the Bechtel Corp. was hired to complete a study on problems at the ill-fated project to help prepare for a possible lawsuit against Westinghouse, the project's lead contractor.
Because the report — kept secret until after the V.C. Summer project collapsed — was part of an anticipated lawsuit, it could remain confidential from regulators, legislators and the public, utility officials told legislators last fall.
However, in filings late Wednesday with the S.C. Public Service Commission, regulators at the state Office of Regulatory Staff said the Bechtel report was put together to assess what was going wrong with the construction of two new nuclear reactors northwest of Columbia, not to support a lawsuit.
"There are substantial circumstances, and previously secret communications and documents that show the owners did not hire Bechtel" in anticipation of a lawsuit against Westinghouse, Regulatory Staff said in Wednesday's filing.
Matthew Richardson, an attorney for Regulatory Staff, said in a written statement, “Documents we have discovered indicate SCE&G has been more interested in protecting its profits than the customers.''
The Regulatory Staff filings support concerns by lawmakers that SCE&G was not truthful with elected officials as they held public hearings into the failure of the massive nuclear project.
The Regulatory Staff filings are part of the agency's effort to obtain thousands of pages of SCE&G records that it says could justify cutting power bills for 700,000-plus SCE&G customers, who still are paying for the failed nuclear project. Among those records are documents related to the Bechtel report. Wednesday's filings ask the PSC to force release of SCE&G records.
“One of my biggest concerns all along was that the utilities, SCE&G and Santee Cooper, were not being completely straightforward with us,’’ said state Sen. Shane Massey, R-Edgefield. “They were misleading us.’’
State Rep. Peter McCoy, R-Charleston, said the Regulatory Staff findings reinforce concerns "that they did not want (information) getting out under any circumstances.''
Instead, SCE&G was scrambling to protect "their bottom dollar,' said McCoy, who — like Massey — was on a legislative committee that investigated the nuclear debacle.
SCE&G spokesman Eric Boomhower disputed criticism leveled at his company by the ORS.
"When the full story of Bechtel report is made public, it will be clear that the assertions by ORS are invalid and misleading,'' Boomhower said in an email Wednesday night. "Because of serious legal and regulatory limitations, we are not at liberty to debate these issues in the public arena at this time. We look forward to the time when the complete story will be available to everyone. ''
The agency also cited another memo from Santee Cooper saying suing Westinghouse, V.C. Summer's lead contractor, would not accomplish much. That was because SCE&G and Santee Cooper had agreed they could recover no more than $150 million in a lawsuit unless they could prove fraud. When abandoned last July, the decade-long V.C. Summer expansion project already had cost far more — roughly $9 billion.
Documents released Wednesday by Regulatory Staff indicate the Bechtel report was kept confidential at the insistence of Westinghouse. Westinghouse wanted protection from legal liability at another nuclear construction project that it was in charge of, the Plant Vogtle nuclear expansion effort in Georgia, records show.
Regulatory Staff released a handful of documents this week to the PSC as part of its effort to shake loose more records. Those records would help make the case to lower SCE&G's power bills, increased nine times to pay for the now-abandoned reactors, Regulatory Staff says.
Both Regulatory Staff and environmental groups, separately seeking rate cuts, have complained SCE&G won't turn over records needed to make their rate-cutting arguments before the PSC.
Among the documents being sought by Regulatory Staff include drafts of the Bechtel report and correspondence about that report. Gov. Henry McMaster recently ordered Santee Cooper to provide some records to Regulatory Staff that had been provided to law enforcement agencies, including the FBI, that are investigating the failed project. But that doesn't include all the SCE&G records Regulatory Staff is seeking. SCE&G is refusing to release a trove of documents, saying they are protected from disclosure.
Last fall, McMaster obtained the final Bechtel report from state-owned Santee Cooper and released it to the public.
The final Bechtel report noted flawed construction plans, faulty designs, inadequate management of contractors, low worker morale and high turnover at the failing nuclear project site. An earlier draft of the Bechtel report provided even more detail, records show.
For months, SCE&G has claimed Bechtel was hired to conduct the study to prepare for a lawsuit over the V.C. Summer project. Among those making that claim was Marsh, the recently departed CEO of SCANA.
In testimony before a legislative committee on Sept. 18, Marsh said: "The purpose of the Bechtel report was to document those issues with an independent consultant for use in a potential litigation against Westinghouse."
Regulatory Staff disputes that, saying company executives were misleading.
"That testimony does not appear to be true,''' according to a Regulatory Staff motion seeking to force the release of SCE&G documents.
A Santee Cooper document, titled “Message from Santee Cooper CEO,’’ indicates the partners in the V.C. Summer project, including Westinghouse, were concerned about another utility, Southern Co., learning of their problems in building the two new reactors in Fairfield County.
Southern was building a similar nuclear project in Georgia, and Westinghouse Electric was the main contractor on both the Georgia and S.C. projects. Westinghouse already was involved in lawsuits with the Southern Co. over the Plant Vogtle project. It worried that releasing the Bechtel report could drive up the cost of any settlements in Georgia, Regulatory Staff records show.
"Westinghouse feared that the Bechtel assessment could be used against it by Southern Co., and thus, Westinghouse demanded that, in return for cooperating with a third-party assessment (by Bechtel), the resulting assessment must be protected,'' according to one Regulatory Staff document..