The VC Summer plant in South Carolina (DJSlawSlaw/CC BY-SA 3.0)

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US utility boss pleads guilty to fraud over failed nuclear construction scheme

26 February 2021 | By GCR Staff | 0 Comments

A former head of US power utility Scana Corporation has pleaded guilty in federal court to conspiracy to commit mail and wire fraud in not disclosing deep problems with a nuclear power project.

No one, not even a Fortune 500 CEO, is above the law– US attorney Peter McCoy

Kevin Marsh, who was chairman and chief executive of the South Carolina company, oversaw his company’s involvement in a failed project to build two AP1000 pressurised water reactors at the Virgil C Summer nuclear power plant in the state.

With the guilty plea, Marsh admitted that he intentionally defrauded ratepayers by giving over-optimistic assessments of progress on the scheme so that his company could obtain rate increases from Scana’s customers and qualify for up to $2.2bn in tax credits.

After the scheme broke ground in March 2013, it suffered delays and cost overruns. By late 2016, according to the Department of Justice (DOJ), Marsh knew that efforts by engineer Westinghouse to improve the pace and productivity of the project were “woefully inadequate”. 

Marsh learned that at least one unit under construction was in danger of not being complete and producing power by 31 December, 2020, a deadline that Scana had to meet to secure federal tax credits worth up to $2.2bn.

As an example of Marsh’s knowledge of the true state of the project, the DOJ cited confidential telephone briefings that he received in December 2016, which indicated that Westinghouse’s costs would be significantly higher than expected, and that Toshiba, Westinghouse’s parent, could not absorb the costs.

Shortly after, Marsh fraudulently withheld this information from South Carolina’s utility regulator.

Marsh’s guilty pleas, made on Wednesday, followed those by Stephen Byrne, former chief operating officer of Scana subsidiary South Carolina Electric & Gas Company, to charges of conspiracy to commit mail and wire fraud (see further reading).

Peter McCoy, the US attorney that prosecuted the case, commented: “Today’s plea shows that no one, not even a Fortune 500 CEO, is above the law. Of course, our efforts in this case would not be possible without the support of our federal and state law enforcement partners.”

In the plea agreement, Marsh agreed to cooperate fully with federal, state and local law enforcement agencies and offered a $5m forfeiture.

On the federal charge, Marsh faced a maximum penalty of five years in prison, a fine of up to $250,000, and supervised release of up to three years. However, in November he agreed to plead guilty to felony fraud charges in exchange for a sentence of between 18 and 36 months.

Virginia-based utility Dominion Energy, which acquired Scana in 2018, will provide $4bn to state rate-payers as damages for the criminal activity that took place in 2015 and 2016.

Image: The VC Summer plant in South Carolina (DJSlawSlaw/CC BY-SA 3.0

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