Santee Cooper should no longer charge its power customers to pay criminal defense fees for its top executives, Gov. Henry McMaster wrote in a scathing letter to the chief executive of the state-owned utility Thursday.
The letter comes a week after news reports that Santee Cooper paid five outside attorneys nearly $850,000 last year to defend five senior executives in civil lawsuits and criminal investigations into the state-owned utility’s role in a failed, $9 billion project to expand the V.C. Summer Nuclear Station in Fairfield County.
“Santee Cooper’s ratepayers are already bearing the burden and consequences of errors and failings by others in decisions in which they played no part,” the governor wrote to Santee Cooper CEO Jim Brogdon in a letter obtained by The State. “These same ratepayers should not also be forced to finance the defense of individuals involved in the resulting investigations.”
Santee Cooper customers have seen their power bills rise by about $5.35 a month to pay for the failed nuclear project. Those monthly power bills are expected to rise another $8 as the Moncks Corner-based utility pays off $4 billion in debt from the nuclear project over the next four decades.
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McMaster’s letter comes more than a week after Charlie Condon, in his first meeting as Santee Cooper’s new board chairman, balked at the utility’s climbing legal bills and questioned why the agency is paying outside defense attorneys to represent current and former top executives.
On Monday, S.C. Attorney General Alan Wilson wrote a letter to Condon questioning whether the “use of public funds for criminal defense expenses” is legal under the state Constitution.
Santee Cooper spokeswoman Mollie Gore could not be reached for comment Thursday evening.
But in a previous email to The State, Gore wrote the five outside attorneys aren’t acting only as “criminal defense” attorneys. They also are helping the executives navigate civil lawsuits accusing Santee Cooper of mismanaging the failed nuclear project.
Santee Cooper pays the attorney fees as part of a longstanding indemnification policy designed to protect employees or board members who haven’t been charged with a crime but are involved in a legal matter because of their position with the utility, Gore wrote.
McMaster long has criticized agency
The Thursday letter is the latest episode in McMaster’s ongoing beef with Santee Cooper.
The Richland Republican has pushed lawmakers since August 2017 — days after the V.C. Summer project collapsed — to sell Santee Cooper in order to pay off its nuclear debt.
He has said a sale is the only way to ensure those debts aren’t passed along to the utility’s nearly 2 million customers — most of whom buy their power from Santee Cooper indirectly, through South Carolina’s 20 electric cooperatives.
In his letter Thursday, McMaster demanded a trove of documents from Santee Cooper, including payments to the attorneys, and any emails or other records that led to their hiring.
It won’t be the first time McMaster has strong-armed the state agency for records.
In September 2017, McMaster used his authority to force Santee Cooper to release the February 2016 Bechtel Corp. report on the nuclear construction project. That long-secret document turned out to be a smoking gun that showed SCE&G and Santee Cooper executives were aware of — yet failed to disclose publicly — serious problems plaguing the project.
Later that year, McMaster successfully pushed then-Santee Cooper board chairman Leighton Lord to resign after accusing him of withholding crucial information, including the Bechtel report, related to the utility’s role in the project.
In March, the governor’s office released a trove of internal Santee Cooper emails that showed the agency’s lobbying team secretly was trying to undermine the governor by working to persuade lawmakers not to sell the utility. McMaster then called a press conference and labeled Santee Cooper a “rogue agency,” again calling on lawmakers to sell the utility.
In his Thursday letter, McMaster said “paying for private attorneys to represent current and former public officials in criminal investigations is at odds with the state-mandated mission of Santee Cooper, the interests of its ratepayers, and the ultimate ends of justice.”
Through Dec. 1, Santee Cooper had paid $847,000 for legal fees for five executives. That included:
▪ More than $235,000 for former chief executive Lonnie Carter
▪ Nearly $139,000 for general counsel Mike Baxley
▪ More than $237,000 for nuclear manager Marion Cherry
▪ More than $219,000 for senior vice president of nuclear energy Michael Crosby
▪ And more than $16,000 for deputy general counsel Steve Pelcher
The attorneys counseling the executives were paid $475 an hour.
The utility also incurred other legal bills stemming from the cost of defending itself.
No one at Santee Cooper — or SCANA, for that matter — has been charged with a crime related to the V.C. Summer project’s failure.
But federal and state investigations are continuing.