South Carolina

Lawyers spar over $64 million in attorneys fees in $2.2 billion SCE&G nuclear settlement

Dominion buys out SCANA: How we got here

Since the V.C. Summer nuclear expansion project was abandoned, SC lawmakers and agencies have tried to keep SCE&G and parent company SCANA from overcharging power customers for the failed project. Here is a summary of what has happened.
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Since the V.C. Summer nuclear expansion project was abandoned, SC lawmakers and agencies have tried to keep SCE&G and parent company SCANA from overcharging power customers for the failed project. Here is a summary of what has happened.

Attorneys argued for more than three hours Tuesday over whether a judge should approve the $2.2 billion settlement of a class-action lawsuit over SCE&G’s failed nuclear plant construction project and the nine electric rate hikes that paid for it.

But the main point of contention at the York County Courthouse was whether the 13 law firms that fought SCE&G for months before negotiating the settlement should earn $64 million in fees — money that could otherwise add to the cash refunds and rate credits going to the Cayce-based utility’s customers.

Circuit Judge John Hayes did not rule Tuesday on the fees or settlement. Nor did he make any comments or ask any questions that hint which way he is leaning.

The proposed settlement would give SCE&G’s nearly 730,000 electric customers in South Carolina up to $200 million in cash refunds from the utility’s new owner, Virginia-based Dominion Energy. Former SCE&G customers who paid higher power bills for V.C. Summer over the past decade also are eligible for some of that money.

But the fight over the ratepayer attorneys’ fees centers on whether those attorneys can take credit for the $2 billion in rate credits that Dominion is giving customers in the form of a $22-a-month cut to power bills.

That rate cut was approved by the S.C. Public Service Commission last December after a month-long hearing into the failure of the V.C. Summer nuclear expansion and who was to blame.

For 71 minutes Tuesday, ratepayer attorney Edward Westbrook explained why his colleagues should get attorneys’ fees worth 3 percent of the total $2.2 billion settlement.

Westbrook said the 13 law firms took a tremendous risk in suing SCE&G. Facing long odds and high-powered defense lawyers, they spent 15 months, 26,000 hours and $865,000 building their case with star witnesses and crucial documents — knowing they wouldn’t be repaid unless they won or settled, Westbrook said.

“There are contingencies, and then there are contingencies with a capital C,” Westbrook said. “This was a contingency case with a capital C.”

Westbrook said the attorneys’ provided witnesses and strategy to the state’s utility watchdog, the Office of Regulatory Staff, as it fought to lower SCE&G’s rates during the PSC case last fall. He said their efforts were crucial in securing the $2 billion in rate cuts that the PSC ordered.

Not everyone agrees. Rob Dodson, an attorney representing seven SCE&G ratepayers who are objecting to the settlement, repeatedly described the idea that ratepayer attorneys secured the $2 billion rate cut as a “purple elephant” – a perspective based in fantasy, not in reality.

Dominion made its offer to purchase SCE&G – and dole out $1.9 billion in rate relief – in January 2018, nearly 11 months before the ratepayer attorneys settled with the company, Dodson said.

Those rate cuts are already being felt by SCE&G ratepayers in the form of lowered power bills, even though the settlement has not been approved, Dodson said, offering the observation as proof the rate cuts don’t stem from the settlement.

“The idea that class counsel is responsible for this $2 billion in rate relief is also not real,” Dodson said. “It is a fiction. It is a mirage. It is not true.”

Westbrook offered testimony from Regulatory Staff’s outside attorney that the ratepayer lawyers were helpful during the PSC trial. He also wrote on a white board the percentage of current and former SCE&G ratepayers who did not object to the settlement: 99.99937%.

“I’ve never been in a class action this large, this complex, where such an infinitesimally small percentage of the class has a concern about it,” Westbrook said.

Dodson countered that ratepayers likely didn’t object in greater numbers because they don’t know how much the attorneys requested. The emails and letters to ratepayers do not spell out, exactly, that attorneys would request between $64 million and $66 million, he said.

Instead, the notice explains that the attorneys could request up to 5% of the “common benefit fund.”

“This lack of transparency is one of the reasons lawyers get a bad reputation,” Dodson said. “It’s one of the reasons people are suspicious and mistrustful.”

Judge Hayes said he would think over the testimony and issue a ruling later.

A list of the attorneys in the case can be found here.

Avery G. Wilks is The State’s senior S.C. State House and politics reporter. He was named the 2018 S.C. Journalist of the Year by the South Carolina Press Association. He grew up in Chester, S.C., and graduated from the University of South Carolina’s top-ranked Honors College in 2015.