Santee Cooper has paid private lawyers representing its officials $1.7 million

Santee Cooper has paid $1.7 million in fees for private lawyers to represent seven key officials over the past 18 months, the state-owned utility’s top lawyer told the S.C. Senate Finance Committee on Wednesday.

Fees ranged from $584,780 to a Columbia firm for representing former Santee Cooper CEO Lonnie Carter to $23,514 to a California-based international firm for representing current acting Santee Cooper board chairman Dan Ray.

The lawyers’ fees are just one more example of the unexpected costly fallout arising from one of biggest business failures in state history: the 2017 collapse of a $9 billion effort to build two additional nuclear reactors at the V.C. Summer nuclear plant in Fairfield County. That effort was a joint venture by state-owned Santee Cooper and then-Cayce based SCANA, an investor-owned utility traded on the New York Stock Exchange.

The failure left both companies saddled with billions in debt. SCANA ceased to exist. It has been acquired by Dominion Energy. And the state’s 170 lawmakers are weighing whether to allow Santee Cooper, an 86-year-old state agency that provides power to 2 million, to continue to exist with reforms or sell it to Florida utility NextEra, one of the nation’s largest energy companies.

The lawyers’ fees were paid by Santee Cooper in connection with ongoing civil lawsuits brought against the public utility in the wake of the failed project, said Santee Cooper general counsel Mike Baxley.

The fees also went to pay the lawyers for representing the officials in an ongoing criminal investigation by the U.S. Attorney’s Office and the FBI into potential criminal wrong-doing connected with the nuclear failure. No federal charges have yet been brought in the ongoing investigation, which now is in its third year.

The fact that the lawyers are handling potential criminal matters doesn’t mean that the current or former Santee Cooper officials are targets of a federal criminal investigation, Baxley said.

“No one at Santee Cooper has been accused of or charged with a crime,” Baxley told a State newspaper reporter during a committee hearing break. “We have not been told we are targets or subjects of the investigation — our role has been witnesses only.”

Because of “the intersection” of civil proceedings and the federal criminal investigations, “Santee Cooper provided counsel to employees who became involved in those two proceedings,” Baxley said. “Our position is that when our employees are caught up in something like that .... in the good faith performance of their duties, the company must stand behind them and provide them representation as needed.”

Here are the lawyers, their clients and their fees to date:

▪ Beattie Ashmore of Spartanburg. He represents nuclear on-site manager Marion Cherry and has been paid $374,677.

▪ Greg Harris of Columbia. He, along with partner Johnny Gasser, represent former Santee Cooper CEO Lonnie Carter. The Harris-Gasser firm has been paid $584,780.

▪ Joe Griffith of Mt. Pleasant represents senior vice president of nuclear energy Michael Crosby. His fees to date are $404,245.

▪ Jerry Theos of Charleston represents Santee Cooper general counsel Mike Baxley. His fees to date are $248,987.

▪ Gibson Dunn law firm of California represents acting Santee Cooper board chair Ray. Its fees to date are $23,514.

▪ Christopher Adams of Charleston represents Santee Cooper deputy general counsel Steve Pelcher. His fees to date are $91,484.

▪ The Pope Parker Jenkins law firm of Newberry represents former Santee Cooper board member Jack Wolfe. The firm’s fees to date are $25,496.

The attorneys’ fee disclosure was only a small part of the Senate Finance Committee’s more than three-hour hearing Wednesday, as senators questioned Santee Cooper officials about the agency’s stewardship — or lack thereof — during the years it undertook its ill-fated venture with the former SCANA to build the nuclear reactors.

During the hearing, officials told senators:

▪ Santee Cooper has $1 billion in potential claims arising from the V.C. Summer nuclear failure, and $6.8 billion in total debt outstanding. Of that debt, $3.6 billion comes from the V.C. Summer failure, and $3.2 billion is non-nuclear venture debt.

▪ Santee Cooper in coming years will spend $30 million to shut down the Winyah coal-fired power plant in Horry County.

▪ Santee Cooper will be building landfills to safely dispose of the tons of coal ash created by burning the fossil fuel. It will cost about $300 million to get rid of the coal ash or mix it with concrete.

State Sen. Shane Massey, R-Edgefield, told Santee Cooper officials, many of whom were in the committee room, that Santee Cooper has problems other than the huge ones caused by V.C. Summer debacle.

“V.C. Summer gave us a reason to look under the hood, and when we looked under the hood, the problems were much more extensive than V.C. Summer,” said Massey, who grilled Santee Cooper officials at length.

Under Massey’s question, current Santee Cooper board chair Ray told the committee that the law that allowed Santee Cooper and the former SCANA to bill customers for ongoing construction costs for years was “bad legislation.”

Basically, Ray said, as a result of that law the publicly-traded SCANA “was more focused on their stock prices than their ratepayer responsibility ... that’s an important piece of how our partner viewed this project.”

“The project between Santee Cooper and SCANA was a terrible agreement. It ceded too much power to SCANA,” Ray said. “It indemnified them for things they should not have been indemnified for and made Santee Cooper an ATM machine to SCANA.

Under Massey’s questions, Ray said that Santee Cooper needed a strong independent “third party oversight” entity that would have kept Santee Cooper informed of the fatal troubles at the V.C. Summer plant, troubles which were years in the making. “We never had that independent voice — we always had it filtered through SCANA,” Massey said.

Moreover, Santee Cooper then-CEO Lonnie Carter was one of the few people who had knowledge of troubles at V.C. Summer, and he did not communicate that to the board, Ray said. Carter “filtered” information to the board, Ray said.

Carter and Santee Cooper’s corporate culture came in for other criticisms by Santee Cooper officials:

▪ Although Carter was a capable CEO, some board members lacked the knowledge to question and challenge him about the complexities of the utility business.

▪ Carter “ran the show from start to finish” and had a style of sharing crucial information with only a few of the board members, thus depriving the board of robust discussions about potential problems.

▪ Carter had knowledge of troubles at the V.C. Summer nuclear plant perhaps four or five years before the project imploded but did not share that knowledge with the board.

▪ Carter and the board allowed Santee Cooper to take an enormous risk with the V.C. Summer project — a risk so large that, if the project failed, it could severely damage the utility’s financial situation.

Senators made it clear to Santee Cooper’s officials that if the Legislature allowed the utility to remain a state agency, it would have to install “guardrails” to have a superior stewardship to protect the utility’s finances and be one that the public could trust.

Massey, especially, was shocked at the board’s lack of knowledge concerning a utility that brought in $2 billion a year.

“We aren’t talking about some county-level recreation board,” he opined.

A bit of drama was added to Wednesday’s session when two Santee Cooper executives — Cherry and Crosby — showed up after irate senators demanded their attendance. The two, on the advice of their lawyers, had declined to attend Tuesday’s sessions. However, they were not questioned.