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US SEC, utility watchdog, push for more VC Summer documents

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US SEC, utility watchdog, push for more VC Summer documents

The South Carolina Electric & Gas Co. and Santee Cooper continue to be pressed to disclose documents that detail how the utilities handled an audit critical of the V.C. Summer nuclear project.

South Carolina lawmakers and investigators have spent several months reviewing what the project partners knew and hid about problems plaguing the abandoned nuclear expansion.

The U.S. SEC has also opened an investigation and issued a second subpoena to state-owned utility Santee Cooper tied to a Bechtel Corp. audit that warned of "fundamental" problems and "poor" construction productivity more than a year before the cancellation of the twin reactors. News of the second subpoena was first reported May 22 by The (Charleston, S.C.) Post and Courier.

The SEC in March directed Santee Cooper, known legally as South Carolina Public Service Authority, to produce documents, communications and agreements dating back to January 2014 on the V.C. Summer project, including those tied to the Bechtel report.

Bechtel, an engineering and construction company, was hired in 2014 by SCE&G and Santee Cooper to write the independent analysis, which was completed in February 2016. South Carolina Gov. Henry McMaster in September 2017 released the 130-page report despite objections by the project co-owners and amid the filing of several lawsuits by ratepayers.

The SEC is seeking information tied to bond agreements or revenue obligations used to fund Santee Cooper's portion of the two scrapped reactors. Specifically, the SEC is seeking "documents, communications and agreements concerning the disclosure or non-disclosure of the Bechtel report, assessment and schedule to bond participants, the authority's accountants and bond investors."

"We are trying to determine if there have been any violations of the federal securities laws," the SEC wrote in the subpoena.

In its 2017 annual report, Santee Cooper said most of its 45% share of the more than $9 billion already spent on the project was "financed with borrowed funds." Santee Cooper spokeswoman said in a May 24 email that the utility is "cooperating fully with the SEC in its investigation of V.C. Summer issues." The SEC declined to comment.

The latest subpoena follows a document subpoena issued by the SEC in October 2017 to SCE&G and Santee Cooper as part of a probe into the viability, cost overruns and subsequent abandonment of the planned reactors.

Separately, the South Carolina Office of Regulatory Staff, or ORS, May 23 filed a motion for state regulators to order SCE&G to produce all copies of the Bechtel report and its related documents as part of its probe into V.C. Summer and related rate relief.

Former SCANA CEO Kevin Marsh repeatedly told lawmakers during legislative hearings that the report was a confidential document that verified the plant owners' concerns with bankrupt contractor Westinghouse Electric Co. LLC.

"Any potential SCE&G lawsuit against Westinghouse would seemingly hinge on how Westinghouse had misled SCE&G about the timeline of the project, and yet that is the precise information left out of the Bechtel report," ORS wrote in its May 23 motion. "ORS strongly believes that these documents demonstrate Bechtel's assessment and report was not for any legal purpose or for a potential SCE&G lawsuit against Westinghouse."

Dominion Energy Inc. also is a party to the proceedings. On Jan. 3, it offered to acquire SCE&G parent SCANA Corp. in a $14.6 billion deal, including the assumption of debt, pitched as a lifeline to the utility and ratepayers following the V.C. Summer abandonment. SCANA and Dominion, in a May 16 filing with the PSC, continue to maintain the Bechtel report and other information ORS seeks is "plainly privileged" and protected.