There is a big story in The (Columbia, S.C.) State newspaper this week from reporter Avery Wilks detailing what his sources are telling him as it relates to the ongoing investigation into #NukeGate – South Carolina’s spectacularly failed government intervention in the nuclear power industry.
According to Wilks, agents of the Federal Bureau of Investigation (FBI) have been engaged in “secret talks” with former Santee Cooper leader Lonnie Carter – the guy who received a multimillion-dollar golden parachute from ratepayers after the V.C. Summer nuclear generating station expansion project went tits up on his watch nearly two years ago.
Santee Cooper is the government-owned, government-run utility that partnered with crony capitalist utility SCANA on the #NukeGate project. It has been a central focus of the investigation for the better part of the last two years.
To recap: On July 31, 2017, Santee Cooper’s leaders pulled the plug on the botched construction of a pair of next-generation, pressurized water reactors at the V.C. Summer facility in Fairfield County, S.C. – throwing the state’s energy future into chaos. Santee Cooper and SCANA had planned on bringing these two reactors online in 2016 and 2017, respectively, at a cost of $9.8 billion.
Obviously, that didn’t happen …
The money was spent, but the reactors weren’t completed – and the utilities couldn’t afford the $10-16 billion price tag necessary to finish them. Even worse, documents released in September 2017 showed the utilities knew in 2016 (and perhaps earlier) that the project was doomed – yet they allegedly concealed this critical information from regulators (and the public) while continuing to raise rates and rack up additional debt.
In fact, Santee Cooper actually proposed a rate hike related to the project just days before bailing on it.
According to Wilks’ sources, though, Santee Cooper’s leader is somehow in the clear as it relates to the debacle. And SCANA is the entity facing the real heat.
Their narrative portrays Carter as a high-level rat, not a “target of the probe.”
“The timing of Carter’s interview indicates he is not likely a target of the probe,” Wilks’ sources told him. ’It instead hints that he is a cooperating witness, helping investigators build their case against other executives – likely his former counterparts at SCE&G (a subsidiary of SCANA).”
Really? Do we buy that?
Wilks explains further …
Investigators working a case of this size and complexity typically start by subpoenaing and reviewing troves of documents, then interviewing low-level witnesses and working their way up the flowchart of command. The main targets of a sophisticated criminal investigation are typically interviewed last, after investigators have built a case against them and can pressure them into pleading guilty.
That is true … but remember, this investigation began way back in September of 2017 (as was exclusively reported by our news outlet). Subpoenas were issued at that time to both SCANA and Santee Cooper, and a follow-up subpoena in March of 2018 sought additional information from the state-owned utility.
Most incriminatingly, as we reported last June, Santee Cooper has found itself under the microscope of the U.S. Securities and Exchange Commission (SEC) – which specifically sought “documents, disclosures, and communications to the SEC, including those involving $2.07 billion of bonds the authority issued in 2015 and 2016, as well as information related to the Bechtel report.”
The Bechtel report, of course, is the damning document (.pdf) that first exposed “who knew what when” regarding #NukeGate. Basically, it proved that SCANA and Santee Cooper knew in early 2016 (at the latest) that this project was doomed – yet failed to take steps to protect Palmetto State ratepayers and taxpayers from the multi-billion dollar fallout.
In fact, not only did they fail to take steps to protect ratepayers and taxpayers, they continued to put them on the hook for the costs of a project that was never going to be finished.
Are we to now believe Santee Cooper and its former chief executive officer are completely off the hook for all of this?
Again, we aren’t buying that …
Don’t get us wrong: We have no doubt whatsoever that Carter – whose $500-an-hour legal bills are getting picked up by ratepayers – is singing like a canary in his talks with federal investigators. And we similarly have no doubt that the tune he is singing is likely improving his position as it relates to consequences coming down the pike.
But do we really believe the leader of one of the two entities at the heart of this elaborate deception is somehow “not a target” of the investigation into their deception?
No, we do not.
If that is true, then this entire investigation is a sham … and we simply do not believe that to be the case based on what we have seen from the new U.S. attorney for South Carolina, Sherri Lydon.
Our view? This investigation must be significantly further along than Wilks imagines, as many of the steps he outlined in his report took place many months ago. Assuming this is true, Carter’s interviews with federal prosecutors would not represent an example of investigators “working up the flowchart of command,” but would instead represent conversations with a primary focus of the inquiry.
Again, we have no doubt Carter is ratting out anyone and everyone he can in an effort to save his own skin … an effort that may ultimately be greeted with success. In investigations like this, the first one to cut a deal always gets the best deal …
But given the sheer amount of investigatory work already undertaken on Santee Cooper, we believe any narrative that presumes the utility and its former leaders are in the clear is false.
WANNA SOUND OFF?
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