Nukegate scandal information

The Nukegate scandal was a political and legal scandal that arose from the abandonment of the Virgil C. Summer nuclear expansion project in South Carolina by South Carolina Electric & Gas (SCE&G) and the South Carolina Public Service Authority (known as Santee Cooper) in 2017. It was the largest business failure in the history of South Carolina. Before its termination, the expansion was considered the harbinger of a national nuclear renaissance. Under joint ownership, the two utilities collectively invested $9 billion into the construction of two nuclear reactors in Fairfield County, South Carolina from 2008 until 2017. The utilities were able to fund the project by shifting the risk onto their customers using a state law that allowed utilities to raise consumers' electricity rates to pay for nuclear construction.

In 2008, the utilities contracted with Westinghouse to build two AP1000 nuclear reactors for an estimated cost of $9.8 billion. The AP1000 design was unique because it relied on pre-fabricated parts which allowed for modular construction. In 2013, construction began at V. C. Summer. However, numerous delays occurred from 2014 to 2017 due to manufacturing errors and incompetence. In 2017, the estimated construction cost had grown to $25 billion. Westinghouse, hobbled by the costs of the V. C. Summer expansion and a separate project in Georgia, filed for Chapter 11 bankruptcy in March 2017. Several months later the project was abandoned by Santee Cooper and SCE&G's parent company, SCANA. Ratepayers continue to pay increased rates for the expansion despite its termination.

The economic losses and subsequent public outrage drastically altered the future of both utilities. The total cost paid by both utilities in legal settlements to ratepayers and shareholders exceeded a billion dollars. The stock of SCANA, the only Fortune 500 company based in South Carolina, dramatically fell. Both SCANA and SCE&G merged with Dominion Energy in 2019. Until the COVID-19 pandemic, the largest issue debated in the South Carolina General Assembly was whether or not to privatize Santee Cooper. In 2021, the General Assembly ultimately decided to reform the organization instead. Santee Cooper will remain under state ownership. However, its board will undergo change.

As a result of Nukegate, two SCANA executives, CEO Kevin Marsh, and Vice President Stephen Byrne, pleaded guilty for fraud after being charged with the crime by the U.S. Attorney's office. Their crimes centered around their efforts to hide the construction delays from shareholders and regulators. The construction of the two units needed to be finished by 2020 in order to qualify for over $2 billion in federal tax credits. The viability of the project relied on receiving the tax credits. However, both men admitted that they knew the project was not going to be completed in time to qualify for the credits and that they hid that information from regulators and shareholders. Both men have also been indicted by the U.S. Securities and Exchange Commission for securities fraud. On October 7, 2021, Marsh was sentenced to two years in prison. Byrne was sentenced to fifteen months in prison on March 8, 2023.^[1] As of March 2023, two executives at Westinghouse have also been charged with crimes. However, due to Santee Cooper's limited involvement, no executives from that organization were charged with any crimes.