Nukegate scandal
Under joint ownership, the two utilities collectively invested $9 billion into the construction of two nuclear reactors in Fairfield County, South Carolina from 2008 until 2017.
As a result of Nukegate, two SCANA executives, CEO Kevin Marsh, and Vice President Stephen Byrne, pleaded guilty for fraud after being charged with the crime by the U.S. Attorney's office.
In May, 2008, SCE&G (a subsidiary of SCANA) and Santee Cooper announced that they had signed an engineering, procurement and construction contract with Westinghouse to build two AP1000 nuclear reactors.
[2] The CEO of Santee Cooper cited the state's projected growth as a determining factor for increasing the utility's energy capacity.
[3] But the site lacked a fully-integrated construction schedule and the pre-fabricated nuclear reactor parts that arrived on-site had been manufactured incorrectly, which caused significant delays.
[8] During the construction process, Westinghouse and other contractors at V. C. Summer violated state law by having unlicensed workers create mechanical and electrical blueprints without having a professional engineer sign off on them.
Nonetheless, the blueprints were often faulty and resulted in "[d]elays, incorrect parts, thousands of engineering changes, and billions of dollars in wasted money".
Bechtel's draft audit stated that the nuclear reactors would not be finished in time to collect the $2 billion in federal tax credits which the project relied on.
[10] However, in Bechtel's final report released in February 2016, the previous finding was removed from the audit at the request of an attorney working for both utilities.
[10] Relying on the impression that the reactors would qualify for the tax credits, the state Public Service Commission approved an $800 million increase in the project's budget as well as a fixed-price contract with Westinghouse.
[10] On March 31, 2017, Westinghouse filed for Chapter 11 bankruptcy due to the costs incurred from both the V. C. Summer expansion as well as the construction of two additional units in Burke County, Georgia.
[16][17] The failure was made possible by the Base Load Review Act that was passed by the South Carolina General Assembly in April, 2007.
[18] The bill, sponsored by state senator Glenn McConnell, essentially allowed the utilities to shift the risk of the construction to ratepayers.
Critics of the act argued that "any management decision by the utility that impact[ed] the cost and schedule of the project" essentially had to be "deemed prudent by the Public Service Commission if it advance[d] the completion of the project", and that this resulted in "cost overruns and schedule delays [becoming] a natural unintended consequence" of the act.
[22] Sanford's chief of staff later said that the Base Load Review Act "was probably the clearest case [he] could ever see of a special interest using all of its power and leverage to get something passed".
[28] In 2020, a judge struck down the city of Goose Creek's attempt to annex and then take over the power supply of a local aluminum smelter.
[29] Commentators and lawmakers cited the Nukegate scandal as a reason why the city utility should be allowed to supply the aluminum smelter's electricity.
In July 2020, Byrne admitted to taking part in a conspiracy to hide damaging information from regulators as well as the public and therefore defrauding SCE&G customers.
[33] Both men admitted to knowing that the project would not qualify for crucial federal tax credits with a deadline in 2020, and that they hid this information from shareholders.
[25] Both men also admitted to providing false information in "earning calls, presentations and press releases" in order to benefit SCANA.
The false statements and omissions enabled SCANA to boost its stock price, sell more than $1 billion in bonds, and obtain regulatory approval to raise customers' rates.
[25] In December 2019, Dominion Energy purchased SCANA and SCE&G with an updated bid that replaced the $1,000 checks with lower rates for customers.
[41] Following the V. C. Summer failure, the predominant issue facing the South Carolina General Assembly from 2018 until the COVID-19 pandemic in 2020 was whether to sell Santee Cooper or to reform the utility's management.
[42] The legislature passed a law at the end of the 2020 session prohibiting Santee Cooper from "entering into agreements that could make it harder for the General Assembly to sell the state-owned utility" in 2021.
[44] Several companies submitted bids to purchase the utility and in February 2020, the South Carolina Department of Administration chose NextEra Energy of Florida as the recommended bidder.
[45] However, Santee Cooper submitted a separate plan to the general assembly to save ratepayers $2.3 billion over the next twenty years by pivoting from coal power plants towards renewable energy.
[49] The bill, which will be considered by the entirety of the House next, also includes "an amendment that would do away with NextEra as the preferred buyer" and "a provision for reforming Santee Cooper".
Some of their replacements in the state legislature, who were not in office at the time of its original passing, have faced criticism in the aftermath of the V. C. Summer failure, nonetheless.
Observers believe state senator Luke Rankin’s association with Santee Cooper led him to have an unexpectedly tight primary race in 2020.
[57] The Coastal Conservation League criticized the General Assembly's consumer-centric approach when considering the future of Santee Cooper.
