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Dominion Energy to pay $192M in settlement tied to failed SC nuclear project

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VC Summer Jan 31 2018 IMG_3552.jpg (copy)

An aerial shows the the V.C. Summer nuclear project. High Flyer/Provided

Dominion Energy, the new owner of S.C. Electric & Gas, has agreed to pay $192.5 million to settle investor lawsuits stemming from the failed V.C. Summer nuclear project. 

The legal settlement is thought to be the largest payout to ever come out of a shareholder lawsuit in U.S. District Court in South Carolina. 

The deal was reached last month after nearly a year of negotiation between the parties. The settlement was filed Tuesday in federal court in Columbia and will likely resolve a huge legal liability for Dominion, which took over Cayce-based SCANA Corp. last year.

The class-action lawsuits were initially filed following the cancellation of the high-profile nuclear project at V.C. Summer station in Fairfield County. It was there that SCANA Corp. and Santee Cooper, South Carolina's state-run utility, spent more than $9 billion on two unfinished nuclear reactors. 

The shareholder litigation accused SCANA and its former executives of misleading investors about the health of the nuclear construction effort in the lead-up to the project's abandonment in July 2017.

The attorneys representing SCANA's investors specifically honed in on a nuclear construction audit produced by Bechtel Corp., one of the country's largest construction and engineering firms. 

Bechtel was hired by SCANA and Santee Cooper in 2015, and produced a report that initially suggested the project would not be completed in time to cash in on roughly $2 billion dollars in federal tax credits.

It also highlighted a litany of problems with the nuclear construction effort, including unfinished blueprints, unorganized warehouses and ineffective oversight by the two South Carolina utilities. 

Gov. Henry McMaster forced Santee Cooper to turn over Bechtel's analysis a month after the nuclear project met its demise, and the lawsuits quickly followed. 

It marked the first time the document was available to the public, state utility regulators and SCANA's shareholders.

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The findings, which were first reported by The Post and Courier, created a political backlash in South Carolina that ultimately led to Dominion offering to buy SCANA Corp. in 2018. 

The newly proposed legal settlement could now require Dominion to pay former SCANA shareholders $160 million in cash payments, and offer another $32.5 million in Dominion stock. Any SCANA shareholder who owned stock between October 2015 and December 2017 will be eligible for part of the settlement. 

Bernstein Litowitz Berger & Grossmann and Labaton Sucharow were the lead firms involved in the lawsuits. The law firms involved in the litigation will seek around 14 percent of the settlement funds, according to the federal court records. 

Marlon Kimpson, a South Carolina state senator and a lawyer with Motley Rice, was the local counsel for the numerous plaintiff attorneys involved in the litigation. 

"I am proud the parties were able to reach this proposed settlement, which I believe offers a fair, reasonable and adequate recovery for SCANA's investors," Kimpson said Tuesday night.

The settlement does not require Dominion officials to admit that their predecessors at SCANA did anything to mislead or harm investors over the course of the nuclear project. 

Rhonda O'Banion, Dominion's spokeswoman, said the company was pleased with the settlement.

The settlement should not affect the monthly bills for Dominion's utility customers in South Carolina.

It also won't resolve the potential criminal liability surrounding the failed nuclear project that federal prosecutors in South Carolina continue to investigate.  

"We continue to cooperate with ongoing investigations and litigation involving the cancellation of the V.C. Summer nuclear construction project, and the company looks forward to a timely resolution of all related matters," O'Banion added.

The class-action settlement will now be presented to a federal judge, who will have to sign off on the terms. 

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.

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