SCANA chief executive Jimmy Addison testified Thursday he wishes his utility had not withheld from state regulators a pair of reports that found its massive nuclear construction project would cost far more to complete than expected and was failing.
But Addison, SCANA’s former chief financial officer, denied an allegation that he pressured a former accountant for the utility to report unrealistically low estimates of the project’s costs to the S.C. Public Service Commission in 2015.
Addison’s testimony came on the sixth day of S.C. Public Service Commission hearings into the failed effort by SCE&G, a SCANA subsidiary, to build two nuclear reactors in Fairfield County. The commission also is considering SCE&G’s future electric rates and a proposal by Dominion Energy to buy its parent, SCANA.
SCE&G increased its electric rates by about $27 a month for its typical residential customer before the Cayce-based utility pulled the plug on the V.C. Summer Nuclear Station expansion in July 2017.
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The state’s utility watchdog, the S.C. Office of Regulatory Staff, has pressed the PSC to slash SCE&G’s rates permanently. Regulatory Staff contends the utility withheld key information from regulators in March 2015 before requesting a rate hike on customers to finance the project.
During the hearing, Regulatory Staff has presented evidence that, in 2014, a team of SCE&G employees conducted an analysis that concluded the project would cost $1.2 billion more than than expected to complete, or $500 million more than contractors were saying at the time.
But in March 2015 testimony with the PSC, SCE&G executives decided to go with the contractors’ estimate that the project would cost an additional $698 million to complete. That lower estimate was based on a productivity rate that never had been achieved on the construction project and would never be met.
Pressed Thursday by Matthew Richardson, a lawyer representing Regulatory Staff, Addison acknowledged keeping the utility’s higher estimate from regulators was “material” – a legal term for significant or noteworthy – and could have affected the PSC’s decision in that rate case.
However, Addison justified SCE&G’s decision to go with the lower, nearly $700 million figure supplied by contractors by saying the contractors had access to better information than SCE&G’s staff.
“The company provided what the company believed was the most accurate information, that being from the contractor that was building the plant,” Addison said. “Having said that, I’m painfully aware of the eroded trust that I’ve heard here.
“Frankly, I wish the company had disclosed those (higher numbers), even if it had caused a deterioration of (SCE&G’s) negotiating power with the (contractors).”
Richardson also grilled Addison over SCE&G’s decision to keep secret a $1 million report by the San Francisco-based Bechtel Corp., completed in February 2016, that found the nuclear project was suffering from a myriad of problems. An earlier version of that report predicted two new reactors would not be finished by the 2020 deadline to collect billions of dollars in tax credits needed to defray their cost.
SCE&G’s attorneys have sought to discredit the Bechtel report. But Addison said he wishes state regulators had known about it.
Addison said he wished Regulatory Staff specifically had requested the report in writing. Addison said SCE&G would have claimed the report was protected by attorney-client privilege — as it did, years later — sparking a debate that would have brought the report to the PSC’s attention.
“It would have been nice to have that debate a few years ago,” Addison said. “But there are no do-overs. I understand.”
Addison also rebutted testimony from Carlette Walker, the former SCANA accountant who now is a star witness for Regulatory Staff, that he was among several executives who pressured her to lie about the project’s cost to the PSC.
In an April deposition, Walker said the utility’s executives – including Addison – in 2015 pushed her to lie and filed unrealistic numbers with S.C. regulators in her name about how much it would cost to finish the since-abandoned project.
Asked by environmental lawyer Bob Guild Thursday if he or any other SCANA employee led Walker to commit perjury by lying to the commission, Addison answered, “I have absolutely not.”
Addison did not say whether any other SCANA employees pushed Walker to lie. But, he said, no one should sign off on testimony they do not believe to be true.
Guild also grilled Addison about ex-SCANA CEO Bill Timmerman’s $1.8 million consulting job for the nuclear project.that SCE&G could produce no time cards, progress reports or other records showing what Timmerman did, if anything, to earn that money.
Addison said he had no idea what work Timmerman did, noting Timmerman’s role was at the discretion of then-CEO Kevin Marsh, who retired last year.
“There’s absolutely no duty whatsoever to perform any services, whatsoever, except duties that may be requested by the CEO,” Guild said of Timmerman’s job description, as laid out in a five-year consulting contract. “You, basically, get to do nothing and get paid $360,000 a year.”