SCANA Corp. Hit with Class Action Alleging Sweeping Corruption Stemming from Defunct Nuclear Reactor Project

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Two South Carolina residents have filed a proposed class action lawsuit against SCANA Corporation that alleges the company left consumers to pick up the tab for a now-defunct nuclear reactor project for which SCANA and the South Carolina Service Authority (Santee Cooper) allegedly submitted materially false statements to state lawmakers. 

The complaint explains that SCANA Corporation, through its operational subsidiary South Carolina Electric & Gas (SCE&G), provides electricity to residents and businesses in the central and southern areas of the state. South Carolina Service Authority, called Santee Cooper, is a public utility with exclusive franchises to provide that electricity. The case asserts that proposed class members have no choice but to buy electricity from these entities (though only SCANA is named as a defendant in this case.)

The 23-page complaint unpacks allegations that date back to February 2006, when the defendant and Santee Cooper announced plans to construct two nuclear reactors at SCANA’s Fairfield County facility. The following year, South Carolina legislators enacted the Base Load Review Act, which the lawsuit explains was meant to provide “a stable funding mechanism” for construction of the reactors. This funding mechanism, the lawsuit says later, amounted to a blessing by the state to charge proposed class members in advance for the construction of the reactor project through “rate hikes in addition to charges for electricity.”

The main contractors responsible for building the reactors, Westinghouse Electric Company and Stone & Webster, Inc., were signed onto the project in May 2008. Around this time, the lawsuit says SCANA and Santee Cooper issued filings about the specifics of the project that including statements assuring the reactors were, among other promises, “necessary to meet the expected growth in future customer needs”; “necessary for providing reasonably priced electricity”; and the most cost-efficient way to meet the companies’ stated goals (despite a having a reported total price tag of $9.8 billion).

At the time these statements were made, the lawsuit alleges SCANA and Santee Cooper should have known, among other supposed shortcomings, that:

“SCANA had a pecuniary interest in making these false or materially false allegations as the Base Load Review Act shifts the burden of both financing and risk of construction from itself onto [proposed class members],” the lawsuit then reads. “By force of law, SCANA and Santee Cooper were then allowed to charge and [proposed class members were] required to pay funds in advance for the construction of the reactor project in addition to the cost of the electricity they had consumed.”

After roughly three years of preconstruction activities, the lawsuit says SCANA and Santee Cooper brought in Bechtel Corporation for an “exhaustive review” of the project. The findings from that review “laid bare the inadequacies of the management” of the whole operation, the lawsuit says. According to the lawsuit, the companies concealed the existence and content of these reports from the public and South Carolina regulators. 

What came between 2007 and 2017, the lawsuit claims, were requests by SCANA and Santee Cooper for additional rate increases due to construction cost overruns and design issues. In October 2014, the complaint continues, SCANA and Westinghouse reportedly entered into a new or revised deal for $14 billion despite the reactor project being nowhere near complete. None of this is to mention the supposedly handsome bonuses the lawsuit alleges SCANA executives received for work directly related to the beleaguered reactor project.  

On July 31, 2017, the lawsuit says SCANA and Santee Cooper announced they were abandoning the reactor project due to alleged “delays in construction, escalating costs, [and] lower reactor projections for energy needs” of proposed class members. Shortly thereafter, the case says SCANA announced its plan to charge proposed class members for the costs associated with shutting down the project, which the lawsuit notes are expected to tally $2 billion spread over 60 years.

The lawsuit alleges that, to date, SCANA customers have contributed $1.4 billion toward the shuttered reactor project.