Dominion Energy has agreed to pay a civil penalty of $25 million to settle a lawsuit brought by the Securities and Exchange Commission against SCANA Corporation and subsidiary South Carolina Electric & Gas (SCE&G) regarding SCANA’s involvement in the failed Summer nuclear expansion project. Virginia-based Dominion acquired SCANA in January 2019.
Dominion disclosed in May that it had reached an “agreement in principle” with the staff of the SEC’s Division of Enforcement to settle the case for the above-stated amount.
The final agreement, which at this writing is still subject to approval by the U.S. District Court for the District of South Carolina, also calls for the payment of $112.5 million in “disgorgement plus prejudgment interest.” This penalty, however, will be deemed satisfied by SCANA and SCE&G’s settlement payments in related rate payer and shareholder litigation.
Painful reminder: In July 2017, as the nuclear community is aware, SCANA and Summer co-owner Santee Cooper announced that they had decided to abandon work on the problem-prone construction project at the Jenkinsville, S.C., nuclear plant, after a total of $9 billion had been spent. The news was surprising, given that up to that point the utilities’ public comments on the project had been consistently optimistic.
Suit specifics: The 87-page SEC complaint alleges that SCANA, SCE&G, and former SCANA chief executive officer Kevin Marsh and former executive vice president Stephen Byrne had misled investors by claiming that the project would qualify the company for more than $1 billion in tax credits, when they knew that the project was far behind schedule and was therefore unlikely to qualify for the credits.
The complaint also alleges that the false statements and omissions propped up SCANA’s stock price, enabling it to raise customer rates and to sell more than $1 billion in bonds. Investors lost hundreds of millions of dollars after the truth regarding the project emerged, according to the complaint.
While Marsh pleaded guilty on November 24 to fraud charges in connection with the Summer project, as did Byrne in July, an SEC announcement noted that its litigation against these two individuals “is still ongoing.”
What they’re saying: “Shareholders were deceived by SCANA and robbed of millions upon millions of dollars,” said U.S. Attorney Peter M. McCoy Jr. “I am hopeful that along with the criminal charges brought forward by our office, this multimillion dollar civil fine and penalty shows that no person or organization is above the law.”
Justin Jeffries, associate director of the SEC’s Atlanta Regional Office, said, “The securities laws require public companies and their senior executives to speak truthfully in their statements to investors. This settlement holds SCANA and SCE&G accountable for their alleged fraud and reinforces that companies must not deceive investors.”