Days after offering his job as a bargaining chip to keep charging customers for an aborted $9 billion nuclear plant expansion, SCANA announced Tuesday that embattled chief executive Kevin Marsh would retire at the end of the year.
Marsh did not offer a reason for leaving the Cayce-based utility after 33 years, but he has spent the past three months on the hot seat after SCANA and the project's minority partner, Santee Cooper, abandoned work at the V.C. Summer Nuclear Station.
The company's stock has fallen by 25 percent since calling off the Fairfield County expansion on July 31 and reached six-year lows Tuesday. The failed project has led to federal and state law enforcement investigations and a probe by the U.S. Securities and Exchange Commission.
Lawmakers and regulators are threatening to cut off the $37 million SCANA collects from customers monthly toward paying the $5 billion the company owes for the partially built reactors. Customers have already paid $1.8 billion worth of interest on that debt since 2009.
SCANA's leaders, including Marsh, have been criticized for painting a rosier picture about the nuclear project’s progress over the years, the subject of shareholder lawsuits.
The departure announcement comes a day after one of the state’s most powerful legislators, House Speaker Jay Lucas, called for Marsh to step down immediately. News of Marsh’s departure was applauded at the Statehouse but lawmakers said the company needs to further change in the aftermath of the failed nuclear project that left nearly 6,000 employees out of work and 2.7 million electric ratepayers with the tab.
"This necessary step should have occurred months ago and never at the behest of outside pressure," said Lucas, R-Hartsville. "SCANA now has an opportunity to begin earning back the public trust it has deservedly lost over the V.C. Summer nuclear facility collapse.”
SCANA Chief Operating Officer Stephen Byrne is retiring along with Marsh, who was also the company's board chairman. Independent director Maybank Hagood of Charleston will become non-executive chairman, and SCANA finance chief Jimmy Addison will become chief executive officer.
“It has been an honor to serve as chairman and chief executive officer of SCANA for the past six years, and to have worked for the company since 1984," Marsh said in a statement. "The ranks of SCANA and its subsidiaries are filled with dedicated employees and they will be in good hands under the (new) leadership.”
The retiring executives could receive up to $20 million in total severance compensation, according to regulatory filings.
Marsh and Byrne's retirements end days of uncertainty over leadership at SCANA. Initial word of the executives’ leaving leaked Saturday but was refuted by the one-time Fortune 500 company amid reports that S.C. House of Representative leaders refused to cut a deal with SCANA for their departure.
The utility issued another stern denial of Marsh's exit as late as Monday afternoon. "No senior executives were terminated, nor did any resign or retire," a SCANA spokesman said, adding that Marsh was focusing on his job and not media speculation.
Roughly 18 hours after releasing that statement, SCANA announced Marsh's retirement — a flip-flop that one critic said put "egg on their face."
The company tried to leverage their departures to keep collecting the nearly 20 percent of customers' bills that goes toward repaying debt for the construction. But S.C. House leaders refused to entertain any swap on Saturday. Instead, senior lawmakers continued their efforts to stop ratepayers from having to pay for unfinished reactors that will never provide a kilowatt of electricity.
Lucas has joined a request with utility watchdogs, environmentalists and businesses, including Walmart, to have state regulators stop SCANA subsidiary, S.C. Electric & Gas, from continuing to charge customers for the aborted project in Jenkinsville. A hearing is set for Dec. 12. Meanwhile, a special House panel sifting through the failed project announced plans Monday to introduce a bill next year to stop the nuclear construction-related collections by SCE&G.
Word of that legislation helped send SCANA’s stock down more than 6 percent on Tuesday, its second-worst day since the project was abandoned in July. The panel’s announcement shook Wall Street awake, making clear that threats to the company’s bottom line weren’t just bluster, said Paul Patterson, a New York-based utility analyst.
Days earlier, Marsh told industry analysts that SCANA was in early talks to clear up some of the uncertainty about how much the company will have to pay and could have a settlement by year's end.
SCANA needs to do more than replace a couple of retiring executives with insiders, lawmakers said.
The company should bring in outside leadership on its board and in its executive offices to navigate the utility without the millions in customer bill collections to cover nuclear construction costs, said state Rep. Kirkman Finlay, a Columbia Republican who sits on the House nuclear plant panel.
"They have wasted time over the past 90 days (since abandoning the project) when they could use someone who can see what to do through a new set of eyes," he said. "There's no way we're going to reward the guys who lost $9 billion by letting them get more money."
The see-saw over Marsh's status with SCANA since Saturday also has hurt the reputation of a major corporate player in the state.
"The board has lost so much confidence over the last three days," Finlay said. Without changes in corporate culture, he added, SCANA's "outcome will not be good."
Senate Majority Leader Shane Massey, R-Edgefield, said he’s surprised that Marsh’s departure took three months. But he said he made it clear to the utility from the outset that leadership changes will make no difference in what the Legislature does.
“We’ve made it clear to them all along we weren’t going to negotiate,” said Massey, who co-chairs a special Senate panel examining the nuclear plant failure. “What decisions you make on leadership aren’t going to affect me whatsoever. A change in leadership doesn’t mean anything unless you have a change in direction."
Gov. Henry McMaster applauded SCANA's leadership change.
"While this decision indicates that SCANA is beginning to fully understand the devastating consequences of abandoning the V.C. Summer project, any effort to regain the public's trust starts with no longer charging ratepayers for this failed project, and refunding them the money they've already paid for it," McMaster said.
Tom Clements with the environmental group Friends of the Earth said Marsh’s departure changes nothing, especially since his replacement is Jimmy Addison, the chief financial officer who was “one of the top people making the sale” to state regulators and investors.
“He is quite responsible for what happened. They may have tossed it into his lap to straighten the mess out," said Clements, who has opposed the project from the start. "They didn’t change anything structurally. There was no apology. They did not say they want to work things out with the Legislature. We still have a big mess on our hands."
Ire has grown with almost weekly revelations in news reports about problems during construction and decisions after the project plug was pulled.
A secret audit, conducted in 2015 and released in September over SCANA's objections, found waste and mismanagement at the construction site. And an investigation by The Post and Courier found the contractors used unlicensed engineers whose poor design work led to delays.
Since the work stopped suddenly on July 31, SCANA has not taken steps to protect the partially built reactors. The company says it's able to take federal tax write-offs by letting the reactors rust.
SCANA had intended to use its $1.2 billion share of a settlement with the parent company of the project's bankrupt main contractor to help pay off the debt. In September, SCANA and Santee Cooper decided collectively to sell off the potential five years worth of payments in order to recover 92 percent of the cash immediately. SCANA has also said it intends to use massive federal tax deductions to cut what's needed from customers.
Still, SCE&G plans on resubmitting its request to state regulators — withdrawn amid the fallout — to increase rates to pay for the V.C. Summer work as allowed under a 2007 state law that also let the investor-owner utility charge customers during construction. Marsh and other SCANA executives are scheduled to brief the S.C. Public Service Commission about the plant Nov. 9.
Marsh earned more than $6 million in salary and other compensation last year. He is eligible for up to $13.8 million in severance payments, according to regulatory filings.
Byrne joined SCANA in 1995 as SCE&G’s chief nuclear officer and executive vice president for generation. He earned $2.6 million in compensation last year. He is eligible for up to $6.5 million in severance payments.
SCANA declined to discuss their retirement packages Tuesday.
"Thousands of S.C. workers lost their jobs last summer due to the colossal mismanagement," said state Rep. Nathan Ballentine, a Columbia Republican on the House nuclear plant panel. "While I appreciate the need to begin to make a change at the top, golden parachutes for retired executives is not the way to do it."
Marsh and Byrne are not the first utility executives to leave after the V.C. Summer failure. Lonnie Carter retired as president of Santee Cooper, the Moncks Corner-based power provider that owned 45 percent of the nuclear reactors. McMaster is trying to sell Santee Cooper, which carries $8 billion in debt — half from the nuclear project. Four Southeastern utilities have expressed interest.
The V.C. Summer reactors were supposed to usher in a new nuclear energy age at a time when electric companies sought cleaner sources of power. But design delays, cost overruns and the bankruptcy of a main contractor doomed the project. The price tag to finish the work had more than doubled to $25 billion, too steep to carry on with construction.
Seanna Adcox, John McDermott and Thad Moore contributed to this story.