A lawsuit filed in federal court against South Carolina’s failed state-owned utility, Santee Cooper, will continue after U.S. district court judge Richard Gergel denied a bid by the embattled, ethically challenged government agency to have the case thrown out of court.
Readers will recall we wrote about this lawsuit last May …
Investor Murray Turka is seeking class action status in connection with the lawsuit, which alleged that Santee Cooper executives “elected not to disclose material information” and made “materially false and misleading” representations related to the abandoned V.C. Summer nuclear generating station expansion project (a.k.a. NukeGate).
To be clear: This class action is different than the class action case currently approaching settlement in state court. However, both actions flow from the Palmetto State’s calamitous intervention in the nuclear power industry – a partnership between Santee Cooper and former Cayce-S.C. based energy provider SCANA that went tits up two-and-a-half years ago to the tune of $10 billion (and counting).
Do the allegations raised by Turka and “others similarly situation” have merit?
Incentivized by state lawmakers, Santee Cooper and SCANA spent $10 billion on the construction of a pair of next-generation nuclear reactors in Jenkinsville, S.C. in 2016 and 2017, respectively.
Despite the massive cash outlay, the V.C. Summer project was never finished – and Santee Cooper and SCANA couldn’t afford the estimated $10-16 billion price tag necessary to complete it. On July 31, 2017 Santee Cooper pulled the plug on the project. Shortly thereafter, it was revealed executives at both utilities knew the reactors were doomed for years and didn’t warn the public.
In fact, Santee Cooper pulled the plug on the reactors just one week after its politically appointed board proposed fresh rate increases related to their construction.
That level of dishonesty continues to this day, incidentally …
In addition to multiple civil lawsuits, there is also a lingering criminal investigation into NukeGate being led by the office of acting U.S. attorney Lance Crick. As we have previously reported, representations made in Santee Cooper bond documents could play a starring role in the criminal case.
As for the federal lawsuit, Gergel sided decisively with the plaintiffs in rebuking Santee Cooper’s bid to have the case thrown out of court.
“(Turka) has adequately alleged that the official statements contained misleading statements and omitted material facts,” Gergel ruled.
Additionally, Gergel ruled these allegations were based on “Santee Cooper’s internal communications” as well as its “communications with (SCANA) acknowledging that the build was at risk as early as 2013.”
Gergel further ruled that Turka “also sufficiently pled with particularity the time, place and contents of the false representations, as well as the identity of the person making the misrepresentation.”
That would be a reference to former Santee Cooper chief executive officer Lonnie Carter, the guy who received a multimillion-dollar golden parachute from the utility (and whose criminal defense bills are still being picked up by ratepayers).
Santee Cooper had also attempted to dismiss any class action claims made against Carter, but Gergel denied that motion as well – arguing the utility made “no argument that Carter acted in good faith.”
Bottom line? This was a decisive victory for the plaintiffs … and a serious legal setback for Santee Cooper at a time when its future is very much on the line with members of the S.C. General Assembly, who are mulling a way out of the disaster they have created for the state.
WEB EXTRA: U.S. DISTRICT COURT RULING
(Via: U.S. District Court)
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