COLUMBIA — SCANA Corp. knew its contractors were mismanaging millions of dollars in construction material soon after work at South Carolina's V.C. Summer Nuclear Station began in 2013, and the large Cayce company was unable to stop the waste before the $9 billion project was abandoned last year.
SCANA detailed how its contractors mislabeled supplies, misplaced documents and lost track of turbine components, as profits rolled in and electric customers fronted the cash for the costly equipment, according to an audit conducted by the utility and other internal documents obtained by The Post and Courier.
Yet, records suggest SCANA never got its contractors to correct the problems, even as its own auditors warned supply issues could lead to further delays on a project already suffering from numerous design setbacks and budget overruns.
The newly disclosed documents, including the 2014 internal audit, could be used by state officials and other groups opposing SCANA's attempt to charge customers more than $3 billion for the abandoned reactors over the next two decades. Lawmakers and regulators already are upset about rosy updates the utility provided as the project faltered. The new information also could bolster lawsuits over SCANA's handling of one of the biggest economic failures in South Carolina history.
SCANA did not respond to email questions about the documents, but said the company looked forward to discussing the nuclear project in front of the state's utility regulators. Westinghouse Electric and Chicago Bridge & Iron, the utilities’ primary contractors throughout most of the project, did not answer questions either.
The records, initially obtained by the Sierra Club and Friends of the Earth as part of a legal request, highlight SCANA’s awareness of some of the project’s deep-seated problems years before an independent consultant, Bechtel, raised similar alarms about missing shipments, the threat of ruined supplies and the utility's lax oversight. But like the Bechtel report, SCANA's audit was not revealed publicly until the project failed.
“What else did they need to know?” asked Rep. Micah Caskey, a Republican from West Columbia who investigated the nuclear project. “What more did they need to think they should have invested in better management?”
In 2014, a year after the first batch of concrete was poured, SCANA’s auditors noted contractors couldn't produce a full inventory of the materials they had purchased. SCANA later said it wasn't sure if it had enough insurance to cover the steel pipes, costly valves and electric transformers they ordered in advance.
They warned the sloppy record-keeping created the risk that construction material couldn’t be located quickly enough for ironworkers, pipefitters and electricians, who were already being delayed by a stream of endless design changes.
And SCANA officials also found proof that workers signed off on deliveries that didn’t actually match what the companies ordered.
“This has very serious cost implications,” said Bob Guild, an attorney for the Sierra Club and Friends of the Earth, who is challenging SCANA in front of state utility regulators.
For many of the construction supplies, Westinghouse's contract allowed the company to tack a 15 percent profit onto every dollar that was spent.
Engineers who worked at V.C. Summer said the companies' failure to properly review the supplies that arrived near Jenksinville led to SCANA purchasing knockoff materials that didn’t meet project quality standards for the nuclear reactors.
A list of SCANA’s commercial disputes with Westinghouse and the other contractors shows the utility became concerned about those “counterfeit, fraudulent or suspect items” slipping into the warehouses as early as July 2013, just several months after construction began.
Suppliers recognized that nobody was paying attention and took advantage of it, engineers told The Post and Courier.
"They realized they could send in whatever the hell they wanted, and they did," said one engineer, who asked not to be named out of fear of being blacklisted from future jobs.
SCANA’s team reprimanded the contractors following the audit in 2014, and asked the companies to address the issues. Westinghouse and CB&I quickly promised fixes. They said they double-checked all the labels on their equipment.
But supply problems persisted, according to SCANA’s records.
A year after SCANA's audit, officials with Bechtel, one of the country's largest construction and engineering firms, found the companies still couldn’t properly locate more than half the material packed into the sprawling construction site and two off-site warehouses that are the size of nearly seven football fields.
When Westinghouse and SCANA officials met for a monthly meeting in March 2016, Westinghouse’s Director of Construction Integration Dan Magnarelli admitted a full inventory check “still needs to take place.”
“There are a lot of issues in this area,” Magnarelli said, according to notes from the meeting.
And by October 2016 — less than five months before Westinghouse filed for bankruptcy — SCANA still listed the “improper storage, tagging and control of material” as one of the major business problems with its contractors, according to a list of contract disputes.
Officials with the Office of Regulatory Staff — the state’s utility watchdog — said they were unaware of SCANA's 2014 audit before it was released by the utility as part of a legal request. Four years ago, the watchdog agency focused more on other problems with the contractors — their inability to manufacture the massive steel building blocks for the power plants, said Ryder Thompson, the agency’s manager of new nuclear development.
Meanwhile, the schedule delays, caused in part by Westinghouse's unfinished reactor design, ensured supplies began showing up at V.C. Summer years before they were ever needed.
By the time the project was called off last summer, only a third of the construction work was completed but 93 percent of the materials were on site.