Barnwell (copy)

New documents emerged this week that poked holes into SCANA's claim that a highly-critical audit of the V.C. Summer nuclear project was conducted in preparation for litigation against Westinghouse Electric. Provided 

COLUMBIA — SCANA's attempts to conceal information about the V.C. Summer nuclear project may have crumbled Wednesday as new evidence emerged about a highly critical audit, poking holes into statements made by the utility's leaders over the past nine months.

SCANA claimed since last September that a 2016 audit of the abandoned nuclear project in Fairfield County was created in preparation for a lawsuit against its primary contractor, Westinghouse Electric. 

As such, the utility's executives repeatedly said the audit by Bechtel Corp. couldn't be shared with the public, state lawmakers, South Carolina's utility regulators or Gov. Henry McMaster's office — who ultimately forced the damning report to be released last fall. 

But here's the problem: Emails and other documents indicate that SCANA and its project partner, Santee Cooper, weren't planning to use the $1 million audit to sue Westinghouse — at least not initially.

The "assessment is not and has never been intended to position owners for litigation," Santee Cooper's former CEO, Lonnie Carter, wrote in a message while the study was being conducted in the summer of 2015.

"Unfortunately, dishonesty is what the people of South Carolina have come to expect from SCANA and Santee Cooper executives, and this is just another example of it," said Brian Symmes, McMaster's spokesman. "Governor McMaster knew last year that the Bechtel report wasn’t a privileged document, which is exactly why he released it to the public against SCANA’s wishes." 

The new documents were released Wednesday by the Office of Regulatory Staff, the state's utility watchdog agency, which is fighting SCANA for access to a trove of records about the failed nuclear project. The agency wants to be allowed to file Bechtel's report as evidence, along with earlier drafts that raised serious concerns about the project's schedule. 

Santee Cooper did not immediately respond for this story. SCANA's spokesman, Eric Boomhower, said the utility would respond to the "assertions" at the appropriate time. 

"It is inappropriate, and does not serve the public interest, to debate these important legal issues prematurely in the news media," Boomhower said. "We ask for everyone to keep an open mind about the issues until the all the facts concerning SCE&G's actions have been presented in the regulatory proceedings." 

Bechtel laid out a litany of problems with the $9 billion construction effort, and its audit has been central to lawsuits accusing SCANA of oversight failures and misleading investors. But SCANA continues to argue those documents can't be used against them in a court or in front of the state's utility regulators. 

SCANA, which owns South Carolina Electric & Gas, is currently being sued by its electric users and investors, and the company remains under investigation by several state and federal law enforcement agencies. Regulators and the state Legislature are also considering whether it should be allowed to charge ratepayers $37 million a month for the unfinished reactors.

Subpoenas issued by federal investigators suggest that they're honing in on the Bechtel report and how the power companies reported its findings to investors and regulators.

The Office of Regulatory Staff is leading that fight before the Public Service Commission, which regulates SCE&G. They've asked commissioners to hold a hearing to decide whether they can admit as evidence Bechtel's findings that critiqued the utilities oversight and that the reactor design they picked was mired in engineering and construction problems. 

"Continued concealment by SCE&G, for example the Bechtel Report, should not be permitted," the Office of Regulatory Staff wrote in a letter to the Public Service Commission.

In the past year, SCANA's leaders repeatedly told state officials — several times under oath — that any reports produced by Bechtel are protected under attorney-client privilege because they paid an Atlanta law firm to commission the audit.

But the notes by Santee Cooper's former CEO cast doubt on those claims. The reason SCANA and Santee Cooper hired the law firm, Smith Currie, was actually to protect Westinghouse, according to the documents.

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 two South Carolina utilities used Smith Currie as a go-between, the notes say, to make sure that any troubling information about Westinghouse couldn't be discovered by Southern Co., an energy giant that's building two Westinghouse-designed reactors at Plant Vogtle in Georgia.

Bechtel's staff also made it clear that it wasn't being hired to wade into a multibillion legal battle, according to a 2015 email that the company's staff sent to Santee Cooper. They offered to assess how the project was going and how well it was being managed. But they said they would not look at the "validity of any pending or future claims" or try to decide who was at fault for the project's problems.

It wasn't even worth SCANA and Santee Cooper suing Westinghouse and its other contractors, according to another document from 2014. The construction contract that was in place at that time capped damages for the South Carolina utilities at $150 million — an award that wasn't nearly large enough to cover the losses the utilities would suffer by slowing down the project during litigation. 

"A legal remedy does not appear viable for (the) owners," the document from nuclear construction meeting says. "At this juncture, we do not have proof of fraud or other business wrongdoing that would allow a court to set aside those agreed damages." 

The Office of Regulatory Staff also asked for any documents produced for a host of federal and state law enforcement agencies that are investigating SCANA in the wake of the failed nuclear project. Those records, they said, are also vital to determining whether SCE&G's more than 700,000 electric customers have to pay for the power plant in coming decades.

"Any wrongdoing or illegal act committed by SCE&G goes directly to the determination of prudency, which is the very crux of the matter before the Commission," lawyers with the Office of Regulatory Staff wrote.

Thad Moore of The Post and Courier contributed to this report.

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