SEC files federal suit against Dominion Energy’s South Carolina utility

Richmond-based Dominion Energy Inc. acquired the utility in January 2019.

Published February 28, 2020 by Sydney Lake

The U.S. Securities and Exchange Commission (SEC) filed a federal lawsuit Thursday against Dominion Energy South Carolina Inc., South Carolina-based utility provider SCANA Corp. and two former SCANA executives, alleging that “SCANA and its senior executives repeatedly deceived investors, regulators and the public over several years about the status of a $10 billion nuclear energy project,” between 2015 and 2017. Richmond-based Dominion Energy Inc. acquired SCANA Corp. for $7.9 billion in an all-stock deal in January 2019.

Filed in the U.S. District Court of South Carolina, the  SEC lawsuit also seeks to force the utility’s former CEO, Kevin Marsh, and former executive vice president, Stephen Byrne, to pay back any ill-gotten gains and be banned from running any publicly traded companies. The complaint says that.

The complaint, which is not a criminal proceeding but also does not preclude federal criminal charges, refers to a failed nuclear project that led to hundreds of millions of dollars in losses to SCANA and South Carolina investors. “Despite knowing that the schedule was unreliable and the tax credits were at risk, SCANA’s senior management publicly touted the construction schedule and the company receiving $1.4 billion in federal tax credits for the expansion project,” the SEC’s complaint reads.

“This is a disappointing development related to a long-standing investigation by the SEC regarding pre-merger activities,” Dominion Energy said in a statement released Thursday . “Dominion Energy has been fully cooperating with the SEC in this investigation. That cooperation began prior to completion of our merger. We are taking this matter very seriously, and are reviewing the complaint to determine our next steps.”

On Feb. 11, Dominion Energy attributed its $1 billion annual earnings drop last year to costs related to the SCANA acquisition, including refunds to retail electric customers of Dominion Energy South Carolina due to the failed nuclear project. The South Carolina-based utility holding company was a majority partner in a failed nuclear reactor construction project that SCANA abandoned in 2017 due to rising costs, work delays and the bankruptcy of its main contractor, Westinghouse Electric Co.

“A lot of it was customer refunds that we took below the line,” Dominion spokesperson Ryan Frazier says of the difference in annual earnings. “We bought the company after [SCANA] walked away from the project. … We worked on a plan to give ratepayers back a lot of the money they had put into the project previously.”

Dominion released a statement clarifying that in December 2019 the company had executed a settlement agreement with former SCANA shareholders for $192.5 million, which was approved by the federal district court of South Carolina in February this year. 

Dominion Energy has more than 7 million customers in 18 states and has more than $100 billion in assets.