SCANA Corporation Securities Fraud Class Action Investigation
In this report:
- Investigation Focus
- Company Information
- Recent Stock Performance
- Investigation Background
- Timeline of Significant Events
- USMA Law Group Press Release
USMA Law Group is conducting an investigation in preparation for a class action lawsuit to recover losses suffered by investors. Contact David P. Abel at USMA Law Group if you have information or would like to participate: 202-274-0237; firstname.lastname@example.org.
The investigation concerns whether SCANA Corporation (“SCANA” or the “Company”) and certain of its officers and directors have violated federal securities laws or other unlawful business practices.
The investigation has focused on any false and/or misleading statements and/or failing to disclose: (1) the February 2016 audit report independently prepared by Bechtel Corporation (“Bechtel”) warning of serious problems that put the nuclear project at risk; (2) other internal indicators that suggested the nuclear project was at risk of failure; (3) instances of lack of oversight and control of the nuclear project allowing for repeated cost overruns and project delays; (4) the actual feasibility of achieving the Company’s projected nuclear project construction timeline; (5) known risks with Westinghouse Electric Company (“Westinghouse”) becoming a credit concern; and (6) known risks that the South Carolina legislature would penalize the Company and/or change laws to make the Company absorb costs associated with the nuclear project (for lack of “prudence”), rather than having costs be paid for by rate increases.
SCANA is an energy-based holding company that delivers power and fuel to customers in the Carolinas and Georgia. The Company operates through segments, including Electric Operations, Gas Distribution, and Retail Gas. Electric Operations, SCANA’s largest segment, generates, transmits, and distributes electricity.
SCANA’s key subsidiary in Electric Operations is the South Carolina Electric & Gas Company (“SCE&G”). SCE&G is engaged in the generation, transmission, distribution and sale of electricity to approximately 707,000 customers in South Carolina. SCE&G also provides natural gas service to approximately 353,000 customers in the state.
|Company||SCANA||Market Capitalization||$8.5 billion|
|Ticker||NYSE:SCG||Common Stock||CUSIP: 80589M102|
|Headquarters||Cayce, SC||Shares Outstanding||142.9 million|
|Incorporated||SC||Free Float||131.1 million|
|Industry||Electric Utilities||Next Earnings Report||October 15, 2017|
|Segments||Revenues (2016)||Debt||SCE&G 4.1% 15-Jun-2046|
Recent Stock Performance
SCANA Price and Volume: January 2016 – September 2017
SCANA vs. Index Performance: January 2016 – September 2017
On April 19, 2006, the South Carolina state legislature passed the Base Load Review Act (“BLRA”). The BLRA allowed SCANA to raise electricity rates to pay for the construction of a nuclear plant, before completing construction. So long as expenditures were “prudent,” the legislation allowed the utility to extract the cost of building a nuclear station.
On March 27, 2008, SCE&G applied to the Nuclear Regulatory Commission for construction and operating license to build two 1,100 MW AP1000 pressurized water reactors (“nuclear reactors”). The nuclear reactors’ build site is known as the Virgil C. Summer Nuclear Generating Station (“V.C. Summer” or “Summer” plant) and located near Jenkinsville, South Carolina, in Fairfield County, approximately 20 miles northwest of the State’s capitol of Columbia. The V.C. Summer nuclear site is already home to one nuclear reactor that began operation in 1984.
About two-thirds of the V.C. Summer plant is owned by its operator, SCE&G. The remaining third is owned by South Carolina Public Service Authority (“Santee Cooper”). Santee Cooper is South Carolina’s state-owned electric and water utility. Similarly, SCE&G owns a majority (approximately 55%) of the new nuclear project for the two reactors and Santee Cooper owns the remaining portion.
Also in March 2008, SCE&G and Santee Cooper announced an engineering, procurement and construction contract had been reached with Westinghouse. Westinghouse agreed to a fixed price of $7.7 billion to complete the Summer project. Total project costs were estimated at $9.8 billion for the nuclear reactors, plus transmission, facility, and financing costs.
The BLRA has been essential for funding the V.C. Summer project. The legislation has allowed for SCE&G to implement nine rate increases. To date, such rate increases have funded about 20 percent of the nuclear plant construction.
Initial estimates projected that one of the nuclear reactors would be operational in 2017 and the second would be operational in 2018. Construction of the nuclear reactors officially began in March 2013.
In October 2014, it was announced that the nuclear project would cost an extra $1.2 billion and take an additional year to complete.
Timeline of Significant Events
- Feb. 2016 – At the request of SCE&G and Santee Cooper, Bechtel completes an independent analysis of the V.C. Summer nuclear project. The contractor summarizes its findings in a 130-page report that seriously questions the feasibility of the nuclear project. SCE&G and Santee Cooper keep the report private.
- Feb. 18, 2016 – SCANA reports financial results for fourth quarter and full year 2015, reaffirms 2016 guidance, and issues long-term guidance.
- Jun. 8, 2016 – SCE&G announces an offering of $425 million in principal amount of its First Mortgage Bonds. SCE&G intends to apply the net proceeds of the offering to repay short-term debt, including costs to construct the new nuclear reactors.
- Feb. 14, 2017 – SCE&G announces that Westinghouse revised its construction estimates, pushing the nuclear project’s final completion date back to December 2020.
- Feb. 16, 2017 – SCANA reports financial results for fourth quarter and full year 2016, announces 2017 earnings guidance and long-term guidance.
- March 29, 2017 – Westinghouse files for bankruptcy effectively nullifying SCANA’s $7.7B fixed price contract for the V.C. Summer project.
- May 26, 2017 – SCE&G asks state regulators to approve an $852 million increase in the projected cost of building the two nuclear reactors.
- July 27, 2017 – SCANA issues a press release announcing an agreement with Toshiba (Westinghouse’s parent company) on a payment plan for the guaranty of obligations by Westinghouse. The announcement alarmed the public that SCANA was likely to abandon the Summer nuclear project.
- July 31, 2017 – SCE&G announces that it would stop construction of the nuclear reactors, file a petition with regulators to abandon the project, and seek $2 billion in capital costs spend on the failed V.C. Summer project from customers. The petition for abandonment would later be withdrawn.
- Aug. 2, 2017 – Media outlets report that state legislators are considering denying SCE&G’s planned request to recover capital costs.
- Aug 9, 2017 – The State publishes an article on SCANA’s executives receiving generous compensation while the V.C. Summer nuclear project unraveled.
- Aug. 11, 2017 – The Post and Courier reports that SCANA Chairman and CEO Kevin Marsh advised state lawmakers that SCE&G might not resume construction on the nuclear power plants even if a new partner for the project was found.
- Aug. 15, 2017 – SCE&G announces it will voluntarily withdraw its new nuclear abandonment petition.
- Aug. 23, 2017 – A special South Carolina House committee reports findings that SCANA applied to build the Summer project with a generic schedule and knowing that it was incapable of estimating costs.
- Aug. 29, 2017 – The Post and Courier reports that at least two (non-investor) class actions have been filed accusing SCE&G and SCANA of fraud and negligence in the years preceding the decision to abandon construction of the nuclear power plants.
- Sept. 4, 2017 – South Carolina Governor Henry McMaster’s office releases the Bechtel audit report that had been kept secret by the utility companies for approximately 18 months. The report suggests that SCANA and Santee Cooper knew, and kept private, that the effort to construct two nuclear reactors were doomed.
- Sept. 5, 2017 – South Carolina lawmakers urge state regulators to block SCE&G from charging its customers any more for the failed V.C. Summer nuclear project.
- Sept. 6, 2017 – The Post & Courier discloses emails it obtained showing a deteriorating relationship between SCE&G, Santee Cooper, and Westinghouse, prior to the contractor declaring bankruptcy.
- Sept. 12, 2017 – Another lawsuit is filed on behalf of rate payers against SCANA and Santee Cooper, marking at least five customer lawsuits to date.
- Sept. 21, 2017 – SCANA announces the Company and its subsidiaries have been served with a subpoena issued by the United States Attorney’s Office for the District of South Carolina seeking documents relating to the Company’s new nuclear project at V.C. Summer Nuclear Station. The subpoena requires the Company to produce a broad range of documents related to the project.
USMA Law Group Press Release
Shareholder Alert: U.S. Market Advisors Law Group PLLC Announces Investigation of SCANA Corporation (SCG)
WASHINGTON, D.C. (September 11, 2017) – U.S. Market Advisors Law Group PLLC is investigating claims on behalf of investors of SCANA Corporation (“SCANA” or the “Company”) (NYSE:SCG). SCANA investors are encouraged to obtain additional information and assist the investigation by visiting the firm’s website: www.usmarketlaw.com/scana/.
The investigation concerns whether SCANA and certain of its officers and directors have violated federal securities laws or other unlawful business practices.
SCANA is an energy-based holding company that delivers power and fuel to customers in the Carolinas and Georgia. In 2008, SCANA’s primary subsidiary, South Carolina Electric & Gas Company (“SCE&G”), and the South Carolina Public Service Authority (“Santee Cooper”) announced plans to construct two nuclear reactors in South Carolina. The nuclear project has been paid for in large part by repeated utility customer rate hikes, granted under the requirement that construction costs were prudent.
On July 31, 2017, after nine years of purported progress, SCANA’s SCE&G and Santee Cooper announced that they would halt construction of the nuclear project, citing rising construction costs.
On September 4, 2017, South Carolina Governor Henry McMaster’s office released an audit report that had been kept secret by the utility companies for approximately 18 months. The report, independently prepared by contractor Bechtel Corporation, warned of serious problems that put the nuclear project at risk. The analysis cited, among other things, flawed construction plans, faulty engineering designs, and high turnover. The following day, South Carolina lawmakers reacted to the report by urging state regulators to block SCE&G from charging its customers any more for the nuclear project.
SCANA’s stock price closed at $59.95 per share on September 5, 2017, marking a decline of $16.17 per share, or 21.2%, from its closing price high of $76.12 per share on July 6, 2016.
If you are aware of any facts relating to this investigation, or purchased shares of SCANA, you can assist this investigation by visiting the firm’s website: www.usmarketlaw.com/scana/. You can also contact attorney David P. Abel of U.S. Market Advisors Law Group PLLC: 202-274-0237.
U.S. Market Advisors Law Group PLLC is a national law firm based in the District of Columbia. The firm represents investors in antitrust, securities, and shareholder litigation. To learn more, visit usmarketlaw.com.
U.S. Market Advisors Law Group PLLC
David P. Abel | Licensed in DC, SC