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Former Scana Corp. CEO Kevin Marsh has agreed to plead guilty in federal court to fraud charges stemming from a failed nuclear project in South Carolina, according to court documents filed yesterday.

Scana was building two nuclear reactors with the utility Santee Cooper, which is South Carolina’s state-owned power company. With rapidly escalating construction costs that had already hit $9 billion, the unfinished V.C. Summer project collapsed in 2017, months after contractor Westinghouse Electric Co. went bankrupt, citing rising costs in South Carolina and at a similar project in Georgia (E&E News PM, July 31, 2017).

The project’s end caused a political and financial firestorm for Santee Cooper and Scana, which is now owned by Richmond, Va.-based Dominion Energy Inc., and has led to the removal of executives at both utilities, an overhaul of the state’s Public Service Commission and sweeping energy policy changes. The ire is in part over Scana’s continued public reassurance that the nuclear reactors would be running in 2019 and 2020, despite cost and schedule pressures.

Scana executives have been accused of making false statements to state utility regulators, lawmakers, the media and electric company customers about the state of V.C. Summer in efforts to get continued approval for rate increases, in charges filed by the U.S. attorney’s office of South Carolina.

“As construction problems mounted, costs rose and schedules slipped, the defendant, Kevin Marsh, and others, hid the true state of the project,” the document states. “Through intentional and material misrepresentations and omissions, the defendant, Kevin Marsh, deceived regulators and customers in order to maintain financing for the project and to financially benefit SCANA.”

Marsh agreed to plead guilty to one count of conspiracy to commit mail and wire fraud, which could result in up to five years in prison and a fine of up to $250,000. He pleaded guilty on a second charge of obtaining property by false pretense, which could send Marsh to prison for 10 years.

As part of his plea deal, Marsh has agreed to provide information about “all criminal activities about which he has knowledge.”

Marsh is the second former Scana executive to plead guilty to fraud and other charges. Former Executive Vice President Stephen Byrne also agreed to tell investigators about Scana’s interactions with government regulators as it sought rate increases and pressed for more investor support for the project (Energywire, July 24).

“No one should use a position of trust, power, & influence to take from the hardworking people of South Carolina. The filed documents speak for themselves & this office will continue its pledge to protect South Carolina taxpayers,” U.S. Attorney Peter McCoy said over Twitter.

V.C. Summer and Southern Co.’s Plant Vogtle project were hailed as a restart to the nation’s dormant nuclear power sector and were the first two to receive construction approval from federal regulators after roughly 30 years.

Any successes at the highly complex, multibillion-dollar reactors have been overshadowed by cost overruns and other issues. A series of vendor problems, quality control issues, delays and contractor changes are among some of the challenges in the projects’ storied histories.

The reactors have become a prime example of why making baseload nuclear reactors is so difficult: They are expensive and complicated to build. But nuclear advocates tout the reactors as putting emission-free electricity on the grid at a time when electric companies are under pressure to decarbonize.

Major construction at V.C. Summer began in 2013 with an eye toward finishing the first reactor in 2016 and the second in 2019. Reactor design problems were among the issues that came with restarting a long-dormant industry.

The issues came to a head in December 2016 when Westinghouse’s then-parent company, Toshiba Corp., issued a news release saying it would have to book a $6.3 billion write-down from the U.S. nuclear projects. What’s more, Westinghouse had struck fixed-price contracts with the utilities, which meant it paid for rising costs.

Marsh and others received a confidential telephone briefing from senior Westinghouse officials that same day, according to charges from McCoy’s office. Those officials said the costs to finish V.C. Summer would be “higher than expected.”

What’s more, Marsh received a separate phone briefing from Toshiba officials saying the company could not absorb the financial hit stemming from Westinghouse’s new cost estimates. South Carolina’s Office of Regulatory Staff asked for detailed information from Scana a few days later, but “Marsh, along with his conspirators, withheld the information provided by the officials from Westinghouse and Toshiba,” the documents said.