CHARLESTON, S.C. (WCSC) - A former South Carolina energy company CEO has paid $5 million after pleading guilty to both federal and state charges tied to a failed nuclear project that misled investors, and now the state is planning on giving that money to electricity customers in need.
Former SCANA CEO Kevin Marsh pleaded guilty in February to federal charges of conspiracy to commit mail and wire fraud. According to the U.S. Attorney’s Office, with the plea, Marsh admits that he intentionally defrauded ratepayers while he oversaw and managed the company’s operations which included the construction of two reactors at the V.C. Summer Nuclear Station.
Prosecutors said Marsh did this so that SCANA, which has since merged with Dominion Energy, could obtain and retain rate increases put on SCANA’s customers and qualify for up to $2.2 billion in tax credits.
“What SCANA relied upon was the Base Load Review Act,” Jim May, an assistant U.S. attorney for the District for South Carolina, said. “The Base Load Review Act was the ability for the utility to finance the project with their customers money before the units ever made power.”
“When you have a situation where you divorce the risk from the people actually making the decisions about actually spending the money, that’s when problems like this happen,” Creighton Waters, the chief attorney of the South Carolina State Grand Jury Division in the Attorney General’s Office, said.
Marsh’s plea agreement has him serving at least two years in prison and paying $5 million. This is different from 2019 when electricity customers, who were charged for the construction of the nuclear plants, were sent checks as part of a $146 million SCANA settlement.
“He had been given bad information, maybe even lied to in the course of this,” Waters said. “However, there was a point late in 2016 the information he had reached a critical mass, and it was then his duty to disclose that information. He didn’t do so, and he’ll be going to prison because of that.”
“They kept derogatory information close to the vest, so that way the project could continue. They put the company above their customers, above the public,” May said.
The $5 million he had to pay was under “disgorgement,” which Cornell Law defines as “a remedy requiring a party who profits from illegal or wrongful acts to give up any profits he made as a result of his illegal or wrongful conduct. The purpose of this remedy is to prevent unjust enrichment.”
“The question we had to look at was, ‘What was the unjust enrichment,” May asked. “What we did was an analysis to try to get disgorgement so a ‘but for’ analysis. But for these lies, what would he not have made? It’s not exactly the easiest process.”
“Eventually, after a careful calculation, all parties agreed that $5 million was the fair number to represent that compensation that he did not deserve,” Waters said.
The South Carolina Attorney General’s office is now planning to send the funds to the Energy Share Program which is administered by the state’s Office of Economic Opportunity. The program helps qualified low-income, disabled, and elderly customers with bill pay assistance for their electric and natural gas services.
“I think all the parties agreed that seemed to be a better use of this disgorgement and this compensation rather than it be deposited into the federal treasury or the state treasury,” Waters said.
“We’re not going to object to funds going to individuals who suffered as a result of the increased bills,” May, with the U.S. Attorney for the District of South Carolina, said.
To learn more about the program, visit the agency’s website. There’s also satellite locations all across the state.