Executive admits fraud in fleecing ratepayers and shareholders
By Linda Pentz Gunter
“It looks like crime might well pay after all.”
That was the weary and only slightly tongue-in-cheek conclusion drawn by longtime anti-nuclear campaigner, Tom Clements recently, after a former South Carolina nuclear utility executive pled guilty to fraud in federal court.
Clements is the director of Savannah River Site Watch, but his activism has, for decades, extended well beyond the perimeter of that vast nuclear site.
For years, Clements and others have followed — and attempted to stand in the way of — the forced march of South Carolina ratepayers toward nuclear fiasco. When it finally unraveled in late July, there was only cautious cause for celebration.
On July 23, Stephen Byrne, the former COO of SCANA, the South Carolina utility originally in charge of the construction of two new nuclear reactors in the state, pled guilty in a massive nuclear conspiracy that defrauded ratepayers, deceived regulators and misled shareholders.
Byrne is charged with lying about progress on two Westinghouse AP 1000 reactors under construction — and since abandoned — at the V.C. Summer site, where costs ballooned to more than $9 billion.
The lies — or “intentional misrepresentations” as court documents described them — were necessary to make the case that the two new reactors would be finished on time, thereby qualifying the company for $1.4 billion in future federal tax credits.
But when Clements did the math, Byrne still came out ahead. “One of the court filings says Byrne earned $6.3 million from 2015-2017,” Clements said. “The project originally started with a filing with the SC Public Service Commission in 2008 and ended in July 2017. His plea agreement says he will pay a $1 million fine, though the judge could make it higher.”
So yes, crime still pays.
And so did South Carolina ratepayers. They were bilked of at least $2 billion until the project faltered and finally collapsed. A class action law suit and decisions by judges will see millions returned to ratepayers.
Ironically, the Nuclear Energy Institute, the industry’s lobbying group, gave Byrne the opportunity to explain exactly how ratepayers could be fleeced in advance to save money. In this 2012 NEI video, Byrne describes how Construction Work in Progress (CWIP) would allow the utility to collect funds from ratepayers in advance rather than waiting for construction completion — which has now, of course, not happened, even though customers paid for two new reactors that failed to materialize.
Byrne, who began cooperating with investigators about two years into the now three year-long investigation, could face jail time and a fine, but will likely testify against his co-conspirators to reduce his punishment.
For the time being, the judge has let him go home without even requiring he post the $25,000 bond. Sentencing could be years down the road. Clements believes Byrne “should face prison time” and that he “must fully reveal the criminal role of others in the conspiracy that has been so disastrous for ratepayers.”
Two other top SCANA executives could also be in the FBI’s crosshairs by now — former CEO Kevin Marsh and former chief financial officer Jimmy Addison.
Early warning signals of trouble to come sounded in February 2020, when Byrne and Marsh were charged with civil fraud by the Securities and Exchange Commission (SEC). The agency said the pair “lied and deceived shareholders, regulators, and the public regarding the construction of two new nuclear units at the V.C. Summer site, which the company abandoned amid massive cost overruns in July 2017,” according to reporting in Energy and Policy.
The thoroughly duped — or possibly hopelessly biased — S.C. Public Service Commission, had earlier “allowed SCE&G to raise its electric rates nine times to finance the doomed V.C. Summer Nuclear Station project,” reported the Charlotte Observer.
But by January 2019, the PSC had changed its mind, saying that “SCE&G intentionally misled the commission about a failing nuclear reactor construction project to win electric rate hikes.”
Clements joined other protesters outside the Columbia, SC courthouse where Byrne pled guilty to his offenses. “As he scurried into the federal courthouse, Byrne refused to tell us if he would apologize for his crime against ratepayers,” Clements said.
He, along with other South Carolina activists, and with support of Friends of the Earth, had consistently opposed the state law (CWIP, described in the NEI video), that had allowed the utility to fleece ratepayers in advance of completion of the reactors. The groups had also contested approval of the two-reactor project before the SC PSC since 2008.
As Clements watched Byrne enter the courthouse, finally forced to face up to his crimes, he basked, for a brief moment, in the glow of the celebratory light at the end of the tunnel.
“I’m glad there is going to be a little bit of justice,” Clements told the Post and Courier. And in an email, he wrote: “Nukes bring fraud, graft and corruption wherever they go. The next charges here will be more serious, I think.”
The Post and Courier described the nuclear debacle as “one of the worst economic calamities in South Carolina history”.
But while there may eventually be a day of reckoning — and sentencing — until then, South Carolina ratepayers could keep right on paying.
That is because, when SCANA went bankrupt over the Summer debacle, Dominion Energy took over. Dominion, says Clements, “will file a rate-hike request next month and the cost to ratepayers for the nuclear construction debacle will go up.”
Headline photo of since cancelled V.C. Summer Unit 3, by NRC/Flickr.