D Dominion Energy Inc

By Mengqi Sun 

Two South Carolina companies and two former top executives face civil fraud charges in relation to a failed nuclear power plant expansion project, the Securities and Exchange Commission said Thursday.

Scana Corp. and two of its former senior executives allegedly repeatedly made false and misleading statements to investors, regulators and consumers between 2015 and 2017 about the status of the $9 billion nuclear project that ultimately failed, the SEC said in a complaint filed in a federal court in South Carolina.

The charges came after Cayce, S.C.-based Scana, the primary owner of the Virgil C. Summer power plant, abandoned the project of building two nuclear reactors in July 2017 after close to a decade of planning and construction, citing high construction costs and delays.

The SEC also charged a Scana subsidiary, South Carolina Electric & Gas Co., which is now known as Dominion Energy South Carolina Inc.

Dominion Energy Inc. acquired Scana in January 2019.

"This is a disappointing development related to a long-standing investigation by the SEC regarding pre-merger activities," the company said in a statement. "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."

The defendants claimed the project was on track even though they knew it was significantly delayed and wouldn't be completed on time by Jan. 1, 2021, to qualify for $1.4 billion of federal tax credits, the securities regulator alleged.

Scana touted the progress of the project in its regulatory filings, earnings calls and press releases, according to the complaint. The statements helped bolster the company's stock price, sell $1 billion of corporate debt at favorable rates and obtain approval from utility regulators to charge its customers higher rates, the SEC said.

The SEC also charged Kevin Marsh, Scana's former chief executive and chairman, and Stephen Byrne, Scana's former executive vice president with responsibilities of overseeing all nuclear operations at Scana. The SEC alleged that the two former executives were at the center of the fraud.

The SEC charged all defendants with violations of the antifraud provisions of the federal securities laws, and charged Scana, SCE&G and Mr. Marsh with reporting violations. The SEC is also seeking return of allegedly ill-gotten gains, financial penalties from all defendants and a bar against Messrs. Marsh and Byrne serving as officers or directors of public companies.

Mr. Marsh didn't immediately respond to a request for comment. A lawyer for Mr. Byrne had no immediate comment on the charges.

"We just received the complaint this evening, and we're reviewing it," said Matthew Martens of the law firm Wilmer Cutler Pickering Hale and Dorr LLP, who is representing Mr. Byrne. "We'll respond in an appropriate time."

Billions of dollars in cost overruns connected to the failed expansion of the nuclear station in Jenkinsville, S.C., helped drive the lead contractor on the project, Westinghouse Electric Co., to file for chapter 11 bankruptcy in March 2017.

Scana announced months after the bankruptcy filing it was abandoning the project, which was one of the largest and most expensive in the history of South Carolina, the SEC said. Meanwhile, Westinghouse was acquired the following year by Brookfield Business Partners LP.

A Westinghouse spokeswoman declined to comment.

--Jonathan Randles contributed to this article.

Write to Mengqi Sun at mengqi.sun@wsj.com

(END) Dow Jones Newswires

February 28, 2020 10:45 ET (15:45 GMT)

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