How SC’s nuclear project collapsed: A timeline
An attorney involved in hiring a consultant to study problems at a failed $9 billion nuclear expansion project Wednesday defended deleting items from that critical report.
Atlanta-based attorney George Wenick testified during Day 10 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 SCE&G’s parent, SCANA.
The $1 million report by the San Francisco-based Bechtel Corp., completed in February 2016, showed SCE&G knew the project was troubled long before it collapsed.
Wenick, a partner at Smith, Currie and Hancock, took responsibility for removing a schedule from the Bechtel report suggesting the nuclear project would not be completed in time to claim $2 billion in federal tax credits. He said SCANA’s executives played no role in that decision.
“This was all mine,” he said. “I stand by that decision. I thought it was the right decision then, and, frankly, in hindsight, I think that was the right decision, based upon what I knew and what I was projecting.”
Bechtel found the first reactor likely was 18-26 months behind its projected June 2019 completion date. Meanwhile, the second reactor likely was 24-32 months behind its projected June 2020 completion.
Documents from state-owned utility Santee Cooper, a junior partner in the project, turned over to state lawmakers, also show Wenick told Bechtel that negative wording about SCE&G’s poor management of the project “must be softened.”
Wenick said he took personal offense to testimony, emails and notes that suggested he helped SCANA scrub and whitewash the report, arguing Bechtel recognized its assessment “wasn’t robust enough to cause SCANA to rely on it.”
Bechtel used “flawed methodology,” Wenick argued. “The preliminary nature of the Bechtel report — with inadequate supporting material and a methodology that I couldn’t endorse — I felt that should not be in the report.”
Wenick denied concealing the report from the public, arguing he instead wanted to protect SCANA and Santee Cooper from litigation with lead project contractor Westinghouse, which declared bankruptcy last year.
Santee Cooper “was aware” of Bechtel’s assessment of the V.C. Summer project’s construction schedule “and they did not ask me for that, ever,” Wenick said.
However, attorney Matthew Richardson — representing the state’s utility watchdog, the S.C. Office of Regulatory Staff — played voicemails from Santee Cooper attorney Mike Baxley asking to see the uncut first draft of the Bechtel report and asking what “thresholds or criteria” would be used to decide what was removed from the final report.
SCANA and its attorneys have said the utility did not disclose Bechtel’s assessment because it was prepared in anticipation of possible litigation with Westinghouse and was confidential under attorney-client privilege.
Richardson, though, pointed to a memo from Santee Cooper’s then-chief executive, saying the Bechtel report “never” was “intended to position (V.C. Summer’s) owners for litigation.”
Regulatory Staff argues SCANA legally was obligated to disclose the Bechtel report to the PSC and Wenick helped shield it from the public until S.C. Gov. Henry McMaster forced its release.
“I had no idea what you folks are entitled to as far as reports,” Wenick responded, referring to the Public Service commissioners. “I wasn’t asked and I never advised” SCANA what to disclose to state officials.
Regulatory Staff contends SCE&G withheld key information when requesting a rate hike to help finance the nuclear project. Regulators, they contend, didn’t know Bechtel had offered serious criticisms of the project’s construction delays.
Attorneys for SCE&G say Regulatory Staff was well aware of the project’s flaws and is “concocting a false narrative.” Utility executives contend Bechtel revealed nothing new about the troubled nuclear project.
SCANA chief executive Jimmy Addison last week testified he never had read the damning Bechtel report and never intends to, calling it “history.” But, he added, he wished it had been disclosed to the Public Service Commission and the public in 2015.
At stake is who will pay for the failed nuclear project — SCE&G’s customers, SCANA’s shareholders or both — and how big the future power bills will be for SCE&G’s roughly 730,000 electric customers.
SCE&G increased the electric rates for its typical residential customer by about $27 a month to pay for the nuclear project before it pulled the plug on the unfinished reactors in July 2017. Subsequently, the PSC cut SCE&G’s nuclear-related rates temporarily.
Wenick’s testimony also could be used in ongoing federal investigations by the U.S. Department of Justice, and Securities and Exchange Commission.
The hearings resume Thursday. Commissioners are expected to make their decision by the end of the year.