SCANA CEO talks of re­ports, cost is­sues

The State - - Front Page - BY AV­ERY G. WILKS aw­ilks@thes­tate.com

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.

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 at­tor­n­ey­client 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. The State re­ported last month 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.”

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