Dive Brief:
- A shareholder class action lawsuit alleges SCANA Corp. executives led a "deliberate misinformation campaign" about the now-abandoned V.C. Summer nuclear project to boost their company's stock price, The State reports.
- The lawsuit, filed in the U.S. District Court for the District of South Carolina, alleges SCANA senior management violated the Securities and Exchange Act of 1934 as they made "false and misleading statements and/or failed to disclose adverse information" on the Summer project that was abandoned in July.
- The suit comes as a newly revealed internal document from lead contractor Westinghouse shows that its senior management was warned the Summer project could be "at risk" as early as 2011. Determining what information SCANA and its partners had on the nuclear project, and when, is expected to be critical in multiple shareholder suits.
Dive Insight:
The new shareholder lawsuit, filed by Motley Rice LLC, focuses on a Feb. 2016 internal report to senior utility management from contractor Bechtel on progress at the Summer plant.
The report warned SCANA and its partner South Carolina Electric & Gas that the Summer project would likely not be successful, citing flawed engineering documents, low morale at the work site, frequent construction changes, high turnover and generally slow progress.
That was about a year and a half before the utilities agreed to scrap the project, and the Motley Rice suit argues that SCANA executives went on "assuring investors that costs spending was prudent and substantial progress was being made, even when cost overruns and other delays began to materialize."
"As a result of defendants' false statements and/or omissions, SCANA's common stock traded at artificially inflated prices," the firm wrote in a release.
A newly revealed internal report from lead plant contractor Westinghouse could add to SCANA's worries. The analysis, reported by the Post & Courier this week, warned top executives at the nuclear developer that it could lose hundreds of millions of dollars on U.S. nuclear projects because it was a seasoned designer, but not an experienced builder.
"The red flags were there and they were raised early," a former employee told the paper. If those warnings trickled up to senior utility management, they could have an impact on the new lawsuit and two other shareholder suits filed against the utility since last month.
Westinghouse filed for bankruptcy in March, and this week reports spread that it could be sold to private equity firms. The company's failure also threw the future of the Vogtle nuclear plant under construction in Georgia into doubt, though owner Southern Co. says it will attempt to complete construction.
