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Santee Cooper helped pay bonuses for SCANA's executives, even as they complained about nuclear project

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VC Summer Jan 31 2018 IMG_3659B.jpg

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

COLUMBIA — South Carolina's government-owned utility Santee Cooper paid millions of dollars in bonuses to the SCANA officials overseeing their failed nuclear project, even as its staff griped that they were mismanaging the massive construction effort.

Santee Cooper paid $8.9 million toward SCANA employees’ bonuses between 2009 and 2015, the utility said Wednesday after the governor’s office released documents outlining the payments.

Those records show that SCANA continued to request money for bonuses even after construction was called off last July. SCANA sent an invoice last August for $3.3 million in bonuses tied to the nuclear project.

Santee Cooper ultimately declined to pay the final bill after its vice president of nuclear energy, Michael Crosby, raised alarms with upper management.

"I will not approve this invoice," he wrote in an email that was forwarded to the utility’s finance chief. "I may get over-ridden ... but if SCANA cares to push this ... CFOs & CEOs will need to get involved."

Crosby said he'd already raised questions in 2011 about why the agency was chipping in for the bonuses. Crosby wrote that he was concerned that the bonuses were doled out in part based on SCANA's profits — a provision he called "more than a stretch."

But Santee Cooper's former chief executive Lonnie Carter shut down his questions, Crosby said, and the utility continued to pay.

"We took it to the top ... but I ultimately got reamed for sitting on invoices," Crosby wrote.

Santee Cooper's funding of bonuses for SCANA employees was hidden from view in recent months as lawmakers, utility regulators and state and federal law enforcement officials probed the failed nuclear project in Fairfield County. But the documents from Santee Cooper have already been shared with federal investigators who are examining the project along with a federal grand jury. 

Other emails obtained by The Post and Courier last month showed Santee Cooper's small nuclear team repeatedly questioned whether SCANA's leaders could properly manage the high-profile nuclear project as far back as 2013. 

They questioned whether SCANA employees were simply "too nice" to stand up to the project’s struggling contractor, Westinghouse Electric, or too "naïve" to push back. They wrote that SCANA had "consistently demonstrated ineptitude" in its project management.

In combination, the documents raise serious questions as to why Santee Cooper's staff continued to pay for the performance bonuses for SCANA's directors, while they openly criticized their ability to control the $9 billion energy project. 

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Gov. Henry McMaster's office released the information because Santee Cooper's more than 175,000 direct customers and the more than 772,000 customers with the state's electric cooperative have a right to know what they paid for, his spokesman Brian Symmes said. 

Santee Cooper spokeswoman Mollie Gore said its contract with SCANA called for the utilities to share expenses on the nuclear project, including executive bonuses. The Moncks Corner utility paid 45 percent of costs, its share of the project meant to spark a new wave of nuclear power.

“Although some members of Santee Cooper management advised against paying it, the decision fell to the CEO,” Gore said. “It was a project administrative decision and so did not require board approval or involvement.” Carter retired soon after the work to add two reactors at the V.C. Summer Nuclear Station north of Columbia was abandoned in July. 

SCANA continued to push Santee Cooper to pay the bonuses up until last summer — a bold move considering state lawmakers were already probing the nuclear boondoggle.

When SCANA requested the last bonus payment from Santee Cooper on Aug. 31, Crosby recognized that the timing was less than ideal. He said he would resist paying the invoice so that the issue would reach the upper reaches of SCANA management, including then-finance chief Jimmy Addison.

Addison became the company's CEO after SCANA's former chief executive Kevin Marsh resigned amid criticism of the utility's handling of the massive project.

"As a minimum, I thought it was worth making Addison get in the loop, understand what his people are doing, and man up and ask if he wants to push this," Crosby wrote.

Santee Cooper's chief financial officer, Jeff Armfield, said he hadn't heard from Addison, but that if SCANA pushed the issue he would consult with Michael Baxley, Santee Cooper's top lawyer.

"On the face of it, I do not see how we pay for exec bonuses related to (the nuclear project) if the bonus was tied to making milestones or some other measure not achieved," Armfield wrote.

V.C. Summer is considered the worst business failure in state history.

Electric ratepayers from Columbia to Charleston to Myrtle Beach, who already pitched in more than $2 billion for construction, face paying for the unfinished reactors over the next several decades. SCANA became a takeover target and has a $14.6 billion offer from Virginia energy giant Dominion. McMaster is looking to sell Santee Cooper.

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

Watchdog and Public Service reporter

Thad Moore is a reporter on The Post and Courier’s Watchdog and Public Service team, a native of Columbia and a graduate of the University of South Carolina. His career at the newspaper started on the business desk in 2016.

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