The nation’s top stock market regulator is investigating SCANA Corp.’s failed nuclear construction project, piling onto the growing stack of legal challenges and criminal probes dogging South Carolina’s largest company.
The U.S. Securities and Exchange Commission, which oversees investment markets, has asked SCANA for documents tied to its effort to expand the V.C. Summer Nuclear Station north of Columbia. The company disclosed the investigation to its investors Tuesday.
Cayce-based SCANA, which owns South Carolina Electric & Gas Co., said the SEC’s subpoena was connected to "an investigation they are conducting relating to the new nuclear project." The SEC declined to comment on the probe or its focus.
SCANA "intends to fully cooperate with the investigation," the company said in a brief statement.
The state-owned power company Santee Cooper, meantime, hasn’t received a subpoena from the SEC, spokeswoman Mollie Gore said.
Santee Cooper, which owned a minority stake in the project, borrowed more than $4 billion from investors to pay for the twin reactors in Fairfield County, putting it in the purview of securities regulators.
"We have no information that Santee Cooper has been named as a subject of an SEC investigation," Gore said in an email.
The SEC inquiry is one of several investigations into the project, which cost some $9 billion before it was abandoned in July. Once heralded as the beginning of an American nuclear renaissance, the two unfinished reactors have instead set off a fight over who was at fault for its failure — and who will be stuck with the bill.
SCANA and Santee Cooper have already received a subpoena from a federal grand jury in Columbia, and the State Law Enforcement Division has opened a criminal inquiry into potential fraud surrounding the project. The state Legislature has formed two panels looking into what went wrong.
The company’s stock fell Tuesday morning on the news before rebounding to $49.13 a share, closing the day essentially unchanged.
Still, SCANA has lost billions of dollars’ worth of value so far this year as the company has sifted through the project’s fallout and investors began to fear they'd have to pick up the tab.
Much of the selloff on Wall Street came after a state watchdog agency tried to stop SCANA from charging its customers for the reactors. Almost a fifth of SCE&G customers’ power bills are earmarked for the project, and the company is billing ratepayers $37 million a month for the reactors.
Members of the Public Service Commission, which oversees SCE&G, haven't yet ruled on the request, which was filed by the Office of Regulatory Staff. Industry analysts have said SCANA's stock could keep dropping if the company is forced to eat its share of the costs.
The plunge so far has inspired at least three shareholders to sue SCANA, accusing the company and its executives of breaking securities laws by hiding the project’s problems from investors. SCANA and Santee Cooper also face lawsuits filed by some of the nearly 6,000 workers laid off when the project was canceled, contractors who say they were stiffed and electric customers who want refunds.
The investors' allegations have focused in part on the so-called Bechtel report, a highly critical audit that questioned the reactors’ viability a year before they faltered. The report was written by the engineering and construction firm Bechtel in early 2016 and kept private until last month, when Gov. Henry McMaster's office released it over SCANA's objections.
The federal grand jury's subpoena also appeared to home in on the report and the power companies' decision not to release its findings. Bechtel declined to comment.
And as legal challenges have piled up for SCANA, the SEC has already been involved on the edges of the V.C. Summer project, thanks to Westinghouse, the lead contractor tasked with building the reactors.
Market regulators have been looking into how Westinghouse recorded the project's finances before filing for bankruptcy earlier this year, court filings show. The SEC has also been investigating the accounting practices of Westinghouse’s Japanese parent company, Toshiba.
Westinghouse declined to comment on the investigations.