You are the owner of this article.
You have permission to edit this article.
top story

Auditors warned S.C. utilities were 'inexperienced,' 'reluctant to act' before nuclear failure

  • Updated
Nuclear Power Station (copy) (copy) (copy)

Auditors warned in the fall of 2015 that SCANA and Santee Cooper were "relatively inexperienced or reluctant to act" as their project to expand the V.C. Summer Nuclear Station faltered. File/Grace Beahm/Staff

SCANA and Santee Cooper executives were "relatively inexperienced or reluctant to act" as contractors bungled their massive nuclear project, auditors warned nearly two years before it failed altogether.

They added the utilities could have done more to get it back on track.

The power companies were in over their depth, according to the auditors from Bechtel Corp., a giant engineering and construction firm hired by the utilities to probe the project. They didn't have experience running such an enormous construction effort, and neither they nor their contractors had "basic project management tools and controls."

"While this was not our original focus, the oversight structure has risen to a higher-than-expected level of concern," Bechtel's team wrote in October 2015, long before the unfinished reactors at V.C. Summer were called off last summer.

The previously undisclosed memo, shared with federal investigators and obtained by The Post and Courier, mirrors concerns that Santee Cooper quietly harbored for year about how the project was being managed. The memo, which documents Bechtel's first impressions of the project, shows how the findings of its third-party review were softened under pressure from SCANA.

According to Santee Cooper's internal notes, SCANA's lawyer, George Wenick, insisted that the audit tone down its critiques of the utilities' oversight. SCANA executives thought the auditors were "too rough" on their management skills, Santee Cooper said in its notes.

The oversight problems were only raised in passing in the final report. Bechtel made a handful of notes suggesting that the utilities' approach wasn't working, but it didn't elaborate in depth.

The final Bechtel report was a bombshell in its own right. It documented a litany of problems on the construction site — from unfinished engineering work on the reactors to designs that were sometimes unbuildable.

The issues Bechtel identified would ultimately tank South Carolina's $9 billion effort to land at the forefront of a new era of nuclear power. The project has instead become one of the biggest financial debacles in state history, and it cost nearly 6,000 workers their jobs when construction was halted in July.

And it was hidden from public view for more than a year while the power companies continued to shovel money into the V.C. Summer project at ratepayers' expense. It took a threat by Gov. Henry McMaster to make the document public months after the reactors were abandoned.

Bechtel's memo in 2015 went a step further than just heaping blame on the project's contractors, Westinghouse Electric and Chicago Bridge & Iron. But while it said those companies' leadership "lacks the experience and competency to manage the project," it also said SCANA and Santee Cooper hadn't done enough to keep them on track.

We're starting a weekly newsletter about the business stories that are shaping Charleston and South Carolina. Get ahead with us - it's free.

The utilities had "untapped rights" to order under-performing workers off the site, Bechtel wrote. They lacked experience and "robust project controls," so they didn't know in real time "what is actually occurring on-site."

The memo even calls into question what Bechtel was hired to do. SCANA has repeatedly said that the firm was hired to bolster a potential lawsuit against the contractors, which is why it resisted its release. Bechtel wrote that it was there to evaluate whether the contractors could finish the project on time and on budget.

Ratepayers who get their power from SCANA's subsidiary, South Carolina Electric & Gas, have paid about $1 billion into the project since Bechtel first raised alarms, and they continue to pay $37 million a month, a sum that makes up nearly a fifth of their bills. Santee Cooper electric users pay less, but they're expected to face rate increases in the next few years.

When the final report was released a few months later, Bechtel's analysis of the schedule was scrubbed out at SCANA's request. The auditors had written that they thought the timeline was unrealistic, and in the new memo, they said more delays and budget overruns were "inevitable." SCANA has said it thought the Bechtel analysis was too cursory to be useful.

The memo also suggests that Bechtel had its own interests to pursue: It was proposing to come on full time to help the utilities with keeping tabs on the contractors, citing its experience with mega-projects like V.C. Summer.

Santee Cooper supported the idea, but its notes show that SCANA quickly shut down the suggestion. SCANA, which owned the majority of the project, pushed to create a new oversight board instead.

Santee Cooper declined to comment on the memo. SCANA didn't respond to requests for comment Monday about Bechtel's findings.

Regardless, both utilities agreed to increase their spending on the project after receiving Bechtel's findings. In the end, the V.C. Summer project cost them $9 billion, plus billions more in interest charges that South Carolinians will be paying for decades.

The Bechtel findings represent a pivotal time for V.C. Summer. They mark a moment when there was no longer any doubt that one of America's first new nuclear projects in three decades was deeply troubled.

But they have taken on new meaning since work on the reactors was shut down and the state has started to apportion blame for their failure.

The Bechtel reports are thought to be key to state and federal investigations into the project's demise, and they have been cited in several lawsuits filed by angry electric users who want their money back and investors who were burned as SCANA's future was cast in doubt.

Reach Thad Moore at 843-937-5703. Follow him on Twitter @thadmoore.

Get up-to-the-minute news sent straight to your device.


Breaking News

Columbia Breaking News

Greenville Breaking News

Myrtle Beach Breaking News

Aiken Breaking News