No V.C. Summer concerns raised by obscure state panel that includes governor

April 18, 2018

Investigative Reports

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By RICK BRUNDRETT

During the years-long V.C. Summer nuclear project, a little-known committee including the governor and four other elected statewide officials never met once to discuss the now-abandoned project.

And despite all the controversy surrounding the $9 billion debacle, the Santee Cooper advisory board – made up of the governor, attorney general, comptroller general, treasurer and secretary of state – still hasn’t met to this day.

Under state law, the advisory board “must consult and advise with” the 12-member Santee Cooper board of directors “on any and all matters which by the board of directors may be referred to the advisory board.”

But the board of directors of state-owned Santee Cooper never referred a single V.C. Summer matter – or anything else – to the advisory board when Nikki Haley was governor or during Gov. Henry McMaster’s current term, according to written responses this week to The Nerve from Treasurer Curtis Loftis and representatives for Attorney General Alan Wilson, Comptroller General Richard Eckstrom and Secretary of State Mark Hammond.

The advisory board also never met on its own, according to the responses, although state law doesn’t prohibit it.

Had the five-member panel been active, it might have provided some much-needed input to the failed nuclear project – now described by critics as one of the biggest financial flops in state history. And Santee Cooper had a legal mechanism by which it could have engaged and alerted five key constitutional officers, including the governor and attorney general.

Santee Cooper was a 45-percent partner with South Carolina Electric & Gas in the Fairfield County nuclear project, which was abandoned last July 31 after the project’s main contractor, Westinghouse, filed for bankruptcy in March 2017.

Shannon Wiley, the chief lawyer in Hammond’s office, said in an email response Tuesday to The Nerve that although state law doesn’t say who can convene the advisory board, “our office has always operated with the understanding that meetings would be convened by the Governor, since the Governor is the chief executive of the state and appoints the members of the (the Santee Cooper board of directors).”

The board of directors is appointed by the governor and confirmed by the state Senate after candidates are screened and qualified by the six-legislator, 10-member State Regulation of Public Utilities Review Committee (PURC), which has considerable control over the regulation of utilities in South Carolina.

McMaster has publicly said he wants to find a buyer for Santee Cooper, whose board chairman, Leighton Lord, resigned in December after being pressured by McMaster to quit over the utility’s response to the V.C. Summer debacle.

Under state law, members of Santee Cooper’s board of directors may be “removed for cause … by the Governor of the State, the advisory board, or a majority thereof.”

McMaster’s office did not respond to two written messages from The Nerve this week seeking comment. Santee Cooper spokeswoman Mollie Gore did not immediately provide a response when contacted this week.

McMaster, then the state’s lieutenant governor, took over as governor in January 2017 after President Donald Trump named Haley, who was elected governor in 2010, as the U.S. ambassador to the United Nations.

Wiley said Tuesday that no advisory board meetings “have been convened” since Hammond has been in office. Hammond was first elected in 2002, as was Eckstrom.

In his written response provided Tuesday to The Nerve, Loftis said he “inquired about (advisory board) meetings and practices shortly after taking office in 2011, but there was no interest in holding a meeting.”

Loftis said he believes the advisory board is the “appropriate vehicle … to hire such services to assist the Board, the General Assembly, the Governor, the Santee Cooper Board of Directors and others make informed decisions about how to better protect our ratepayers and stop the financial bleeding our state is experiencing as a result of this catastrophe.”

SCE&G ratepayers collectively have paid more than $2 billion for the V.C. Summer project through nine rate hikes that were approved over the years by the state Public Service Commission under a quietly passed 2007 state law, called the Base Load Review Act.

A typical residential SCE&G customer pays about $27, or approximately 18 percent, of a monthly $147 bill for 1,000 kilowatt hours toward the failed nuclear project, according to the state Office of Regulatory Staff, which, as The Nerve reported, signed off on the rate hikes though it is charged, in part, with protecting ratepayers’ interests.

In September, Attorney General Wilson’s office issued a formal legal opinion, at the request of state lawmakers, contending that some provisions in the 2007 law allowing SCE&G rate hikes for the nuclear project were “constitutionally suspect.”

With Santee Cooper, which is not regulated by the PSC, a typical residential customer pays about $5, or approximately 4.5 percent, of a monthly $118 bill for 1,000 kilowatt hours, according to the utility. Given the utility’s overall, 40-year debt load of more than $15 billion with interest, ratepayers likely will face rate hikes in the coming years, as The Nerve in February reported.

In an email response Tuesday, Wilson spokesman Robert Kittle said Santee Cooper’s board of directors “never referred any matters to the advisory board related to the V.C. Summer project, either during the tenures of Gov. McMaster or former Gov. Haley, and the advisory board on its own did not take up any V.C. Summer matters with the board of directors.”

Asked why Wilson, who was first elected in 2010, never requested a meeting of the advisory board to discuss the nuclear project, Kittle said the attorney general is “taking action now,” referring to the September opinion on the 2007 law and other related legal actions, though it doesn’t involve the advisory board.

“We didn’t (take action) before because we didn’t know anything was going on,” he said.

Kittle contended that the advisory board has “no oversight authority, no investigative authority – it’s just an advisory board,” though he also said he didn’t believe anything in state law prevents the board from “doing something” on its own.

Under state law, the advisory board has several duties, including setting the “compensation and expenses” of board of director members, ordering public hearings for proposed property purchases by the utility from private corporations, and “carefully” investigating  and issuing written recommendations on the proposed purchases to the board of directors and Secretary of State’s Office.

Wiley, the general counsel in the Secretary of State’s Office, said no reports by the advisory board on proposed purchases have been filed with the office.

Brundrett is the news editor of The Nerve. Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

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