SCANA lead­ers could face charges

The State - - Front Page - BY TOM BAR­TON tbar­ton@thes­tate.com

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 re­lat- ed 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 Vir­gini­abased 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.

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