Santee Cooper sues SCE&G

Nuclear partner charges utility with fraud, misconduct

Jerry Bellune
Posted 1/10/19

A gentleman’s agreement between 2 of the state’s largest utilities appears over.

Taxpayer-owned Santee Cooper has accused investor-owned SC Electric & Gas of civil fraud, misconduct and …

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Santee Cooper sues SCE&G

Nuclear partner charges utility with fraud, misconduct

Posted

A gentleman’s agreement between 2 of the state’s largest utilities appears over.

Taxpayer-owned Santee Cooper has accused investor-owned SC Electric & Gas of civil fraud, misconduct and numerous “breaches of duties” in a legal filing in state court last week.

Lexington County-based SCE&G is Santee Cooper’s partner in a failed $9 billion nuclear power project the 2 utilities abandoned but want ratepayers to pay for.

The State newspaper reported that both utilities signed an agreement in 2011 giving SCE&G authority to oversee all aspects of nuclear construction.

SCE&G owns 55% of the project, Santee Cooper 45%.

SCE&G broke that agreement with “various fraudulent acts,” including “dishonesty, bad faith, unfair dealing and the unlawful appropriation of Santee Cooper’s money by design,” according to the legal filing.

This is the first time San-tee Cooper has publicly accused SCE&G of wrong-doing and gross negligence.

The State reported SCE&G did not immediately respond to requests for comment.

Santee Cooper filed the lawsuit hours before Virginia-based Dominion Energy announced it had completed the purchase of SCE&G and its parent company SCANA.

The nuclear failure has become one of the state’s biggest economic blunders.

It sullied the reputations of state lawmakers, regulators and once-respected business leaders who were the project’s supporters.

SCE&G’s 727,000 electric ratepayers paid more than $2 billion for the nuclear project SCE&G executives promised would lower rates.

Santee Cooper’s more than 2 million customers can expect to pay more than $6,000 each over the next 40 years to pay off that utility’s $4 billion nuclear debt, The State reported.

Santee Cooper’s suit charges that since 2014 it repeatedly pleaded with SCE&G to improve its oversight of the project.

As lead contractor, Westinghouse Electric caused years-long delays and billions in cost overruns.

“SCE&G willfully and intentionally did not confront Westinghouse” about its “failure to manage the project,” the filing said.

Santee Cooper says it:

• Emailed SCE&G CEO, Kevin Marsh in September 2014 that it wanted an additional construction expert to evaluate construction.

• Suggested in February 2015 that Bechtel Corp., the country’s largest construction company, be hired to assess the project.

• As a result of the Bechtel report, it recommended in 2016 that SCE&G hire more independent engineering and construction experts to evaluate lack of progress.

SCE&G hired no one “despite Santee Cooper’s repeated requests,” the suit reads.

• SCE&G “resisted Bechtel’s attempt to develop a final report” and demanded the report be altered.

• SCE&G hid the report, claiming it was protected by attorney-client privilege.

“Because of SCE&G’s “intentional misconduct and failure to exercise even slight care,” Santee Cooper had to hire lawyers to defend it in legal actions.

“Santee Cooper is entitled to damages arising from SCE&G’s gross negligence,” the filing said.

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