South Carolina

SC agency asks regulators for $1.5 billion in sanctions against SCE&G

Will SCE&G comply with the SC Legislature’s rate cut order?

Attorney Bob Guild talks about the new SCE&G order to reduce the burden on ratepayers for the failed V.C. Summer nuclear project.
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Attorney Bob Guild talks about the new SCE&G order to reduce the burden on ratepayers for the failed V.C. Summer nuclear project.

SCE&G’s secrecy in concealing problems at a bungled nuclear project should cost it at least $1.5 billion, saving its power customers money, a state agency says.

The S.C. Office of Regulatory Staff has asked the S.C. Public Service Commission to levy financial sanctions against Cayce-based SCE&G and its would-be acquirer, Virginia-based Dominion Energy, for engaging in a “deliberate scheme” to conceal key documents needed for pending nuclear proceedings.

In its motion filed Thursday, Regulatory Staff says SCE&G violated a PSC order to provide regulators with a once-secret report and documents related to that report, which outlined major construction problems at two now-abandoned V.C. Summer nuclear reactors.

In its motion, Regulatory Staff does not specify the amount of sanctions it is seeking.

But agency attorneys say that, at a minimum, the PSC should disallow any costs related to the failed nuclear project that were incurred after Oct. 22, 2015, in setting SCE&G’s future electric rates.

Doing that would cost SCE&G and its parent company, SCANA, about $1.5 billion.

Regulatory Staff also asks that SCE&G be required to reimburse its legal costs in pursuit of the withheld documents.

SCE&G previously blasted Regulatory Staff for seeking records that the utility claimed were irrelevant to customers’ rates.

A SCANA spokeswoman Friday said the utility has released 2.5 million pages of information in response to hundreds of requests for information by Regulatory Staff. She also noted SCANA and Dominion have proposed a $1,000 refund for each household served by SCE&G, on average, and to cut electric rates by $10 a month.

“The company’s response to the ORS’s motion is due Tuesday, Aug. 14, and we will fully respond to the ORS’s claims at that time,” spokeswoman Rhonda O’Banion said.

A Dominion spokesman referred all questions to SCANA and SCE&G.

Who knew what and when?

October 2015 is when SCE&G executives were briefed on the findings of the Bechtel report, which detailed flawed construction plans, faulty designs and inadequate management at the V.C. Summer site, which SCE&G abandoned last year.

The Bechtel report only came to light when S.C. Gov. Henry McMaster forced the state-owned Santee Cooper utility, SCANA’s junior partner in the V.C. Summer project, to disclose a copy.

“Sanctions are the appropriate response to Joint Applicants’ continued failure to produce the Bechtel documents,” according to Regulatory Staff’s motion Thursday. “Further delay — whatever the reason for it — is neither justified nor excusable; instead it severely prejudices the ability of ORS to do the work statutorily required in these proceedings.”

The PSC approved two rate hikes for SCE&G to finance roughly $1.5 billion in costs related to the V.C. Summer project after October 2015.

In total, SCE&G’s customers have paid more than $2 billion to finance the bungled $9 billion project.

Also, SCE&G’s customers or SCANA’s shareholders — or both — could have to pay billions more to repay the project’s remaining debt, depending on how the PSC rules later this year.

‘This ... is not a game’

SCE&G has sought to try to keep secret roughly 1.4 million pages of documents that could explain more about why the nuclear expansion project failed.

In May, Regulatory Staff filed a motion to compel SCE&G to produce the Bechtel report and related documents, including draft reports and communications about the report.

SCE&G, through its parent company, SCANA, responded by providing two pages worth of notes and a log of some 62 documents it is withholding from regulators. The utility claims those documents are immune from disclosure because they are covered by attorney–client privilege or a confidential work product. That document log also was marked confidential by SCE&G.

“The discovery process in proceedings of this commission is not a game,” attorneys for Regulatory Staff wrote in their agency’s motion for sanctions, filed Thursday. “Orders directing discovery cannot be ignored, nor can (or should) facts be shielded from disclosure through wrongful and abusive invocation of” privilege.

A response from SCE&G to Regulatory Staff’s motion is due by the close of business Tuesday, and Regulatory Staff has until Thursday to file its rebuttal.

Friends of the Earth, an environmental group fighting to reclaim money that SCE&G’s ratepayers paid for the V.C. Summer project, said it has run into the same “stonewalling” by SCE&G to obscure “that it knew long ago that the project was in the ditch and had little chance of being salvaged.”

Tom Barton: 803-771-8304, @tjbarton8
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