Dominion buys out SCANA: How we got here
The possibility of criminal charges against a S.C. utility and its leaders for their management of a failed nuclear project loomed over the seventh day of Public Service Commission hearings Friday.
SCANA chief executive officer Jimmy Addison continued to plead ignorance about the Cayce-based utility’s management of its failed $9 billion V.C. Summer expansion, while acknowledging federal investigators could use his testimony before the PSC in their own probe.
“You’re aware that anything that is taken down by this very capable court reporter could become evidence in an FBI investigation, and you understand that?” Scott Elliott, an attorney representing the South Carolina Energy Users Committee, asked Addison.
“Certainly,” Addison responded.
“And it could become evidence in an SEC, Securities and Exchange Commission, investigation, couldn’t it,” Elliott asked.
“It could,” Addison responded.
A representative of the FBI took notes during Friday’s hearing, according to the state’s utility watchdog, the S.C. Office of Regulatory Staff, which said the federal agency’s investigation into the nuclear project “remains active and ongoing.”
SCANA spokesman Eric Boomhower said the utility “is fully cooperating” with ongoing federal investigations but declined to comment further.
For a second day, Addison faced a barrage of questions about SCANA’s handling of the abandoned V.C. Summer nuclear project, saying his job, at the time, was to raise money to pay for two now-abandoned nuclear reactors, not be involved in the project’s oversight.
Addison was SCANA’s chief financial officer throughout the project and signed off on quarterly financial reports about it, including filings to the SEC. He became chief executive this year after SCANA’s then-CEO, Kevin Marsh, and its chief nuclear officer, Stephen Byrne, stepped down amid the project’s fallout.
Addison said he was looped in on the nuclear project only on a quarterly basis, arguing “red flags were raised” in reports to state and federal regulators. He repeated he was not personally involved in SCANA’s decision not to disclose a pair of reports that found the project would cost far more than projected and was failing.
Addison said he never read the damning Bechtel report and never intends to — “because it’s history” — but said he wished it had been disclosed to the Public Service Commission and the public in 2015.
Addison also said he did not know if SCANA’s board of directors has seen the report, which laid out a host of problems with the project. He added he does not know if SCANA’s board has received the findings of an internal investigation it ordered or what that investigation found.
“I’ve heard so many ‘I don’t knows’ out of you,’ ” S.C. Public Service Commissioner John “Butch” Howard told Addison. Other commissioners, too, expressed surprise at Addison’s lack of knowledge about a project that he was tasked with raising money for.
“I paid attention to the responsibilities I had related to the project, which was raising capital,” Addison said. “I felt information was made (available) to me through the appropriate processes” for the required disclosures to the SEC, PSC and Regulatory Staff.
At stake in the Public Service Commission hearings into the effort by SCE&G, a SCANA subsidiary, to build two nuclear reactors in Fairfield County is who will pay for that failed project — SCE&G’s customers, SCANA’s shareholders or both — and how big the future power bills of about 728,000 SCE&G customers will be.
The hearings also will decide whether Virginia-based Dominion Energy finalizes its proposed buyout of SCANA.
SCE&G increased the electric rates for its typical residential customer by about $27 a month to pay for the nuclear project before the Cayce-based utility pulled the plug on the unfinished reactors in July 2017. Subsequently, the PSC cut SCAE&G’s nuclear-related rates temporarily.
Regulatory Staff is pressing the PSC to slash SCE&G’s rates permanently, arguing the utility withheld key information from regulators in March 2015 before requesting a rate hike to help finance the nuclear project.
Attorneys for SCE&G say Regulatory Staff was well aware of the project’s flaws. Now that the project has failed, Regulatory Staff is trying to scapegoat SCE&G and its parent company, SCANA.
Commissioners Friday heard from an equity analyst, who said Regulatory Staff’s proposed rate cut would make it harder for SCANA to attract and keep investors, and more difficult for it to borrow and maintain a healthy cash flow.
However, Addison acknowledged SCANA retains valuable assets. For example, Florida-based NextEra made an informal offer to pay $2 billion for the utility’s N.C. natural gas subsidiary, he said.
In his buyout offer, Dominion has proposed refunding $1,000 to each SCE&G electric customer and cutting SCE&G’s power bills by about $10 a month. However, the Virginia-based utility would charge the average SCE&G customer another $4,000 to pay for the unfinished nuclear project over the next 20 years.
In an alternate plan, Dominion has proposed dropping the $1,000 refunds in favor of a bigger, $20-a-month rate cut. That plan would cost SCE&G customers about $1,700 over the next 20 years.
Addison said he did not know whether SCANA could stay afloat under the Regulatory Staff’s rate-cut proposal, adding he could not definitively say whether those cuts would force the company into bankruptcy.
Either Dominion proposal, he said, would be be better for South Carolina and SCE&G’s customers, replacing that uncertainty with stability.