Politics & Government

Who wins when power companies make political contributions? The lawmakers who police utilities

FILE: State Rep. Bill Sandifer, R-Oconee, sits on the State Regulation of Public Utilities Review Committee.
FILE: State Rep. Bill Sandifer, R-Oconee, sits on the State Regulation of Public Utilities Review Committee. tdominick@thestate.com

Power companies have contributed at least $294,000 since 2005 to the campaigns of a handful of S.C. lawmakers who help choose the watchdogs that oversee those utilities.

The volume of the donations flowing to members of the legislatively controlled Public Utilities Review Committee is another sign South Carolina’s regulatory system is broken, critics say, noting the $1.7 billion that one utility was allowed to charge its customers for a failed nuclear construction project in Fairfield County.

PURC – made up of six legislators and four private citizens – could find itself in legislators’ cross hairs as the General Assembly studies the aborted V.C. Summer project and recommends reforms.

“What the V.C. Summer failure has told us is that the process, from top to bottom, needs reform,” said state Rep. Kirkman Finlay, R-Richland.

The nuclear fiasco illustrates PURC’s failure to nominate and evaluate state regulators, critics say. Those regulators had the authority to stop the doomed nuclear project or Cayce-based SCANA’s nine ensuing nuclear-related rate hikes.

One critic, a Democratic S.C. House member, said he soon will file a proposal to block regulated utilities from donating to campaigns of state-level candidates, including the lawmakers who decide who polices those utilities.

However, PURC’s defenders say the committee is getting a bad rap. They downplay the contributions, noting utilities shower donations on many other public officials as well. And, they say, PURC did its job with the information it had at the time, when state officials were in the dark about the V.C. Summer project’s problems.

Utilities gave to key players

PURC was formed after a 2004 law changed how South Carolina regulates utilities.

It was tasked with vetting applicants to the Public Service Commission – the board that approves or rejects power rate hikes – and conducting annual evaluations of commission members and Office of Regulatory Staff Director Dukes Scott.

Since then, power companies, their subsidiaries and their employees have contributed at least $2.6 million to the campaigns of more than 320 S.C. lawmakers and statewide candidates, according to The State newspaper’s analysis of campaign finance data compiled by the National Institute on Money in State Politics.

Lawmakers on PURC have received more, on average, than other elected officials. For every $10 that power companies contributed to state-level candidates, roughly $1 went to a PURC member, data show.

The biggest beneficiaries of power companies’ generosity were PURC members who also held other positions that allowed them to shape policy that affected utilities – such as the 2007 Base Load Review Act. That law cleared the way for the V.C. Summer project by permitting SCANA to charge its customers the cost of two nuclear reactors while they were under construction.

The legislators on PURC who received the largest contributions from utilities included:

▪  Former state Sen. Tommy Moore, D-Aiken, a PURC member from 2005-07 who also sat on the Senate Judiciary Committee, which vetted proposals concerning utilities. He received $116,500 in campaign donations from utilities.

▪  State Sen. Luke Rankin, R-Horry, another Senate Judiciary member who joined PURC in 2006. He has received more than $33,000 from utilities since then.

▪  State Rep. Bill Sandifer, R-Oconee, chairman of the House Labor, Commerce and Industry Committee, who has sat on PURC since its inception. He has received at least $69,000 from utilities since 2005.

PURC members and other legislators say utilities’ donations – mostly from South Carolina’s co-ops, SCANA and Duke Energy – did not affect their decision-making.

South Carolina’s electric cooperatives have contributed at least $122,000 to PURC members since 2005, data show.

SCANA, the utility that led the failed V.C. Summer project, contributed another $81,000 to legislators on PURC. Duke Energy and its subsidiaries contributed at least $75,000 to their campaigns.

The utilities say they don’t donate to politicians to buy influence at the State House.

“We support members of the General Assembly that support electric cooperatives,” said Mike Couick, chief executive of the Electric Cooperatives of South Carolina.

‘This is broken’

But critics say those donations, plus fleets of legislative lobbyists, have helped soften PURC’s regulation of utilities.

After legislators passed the utility-friendly Base Load Review Act in 2007, PURC-approved Public Service Commission members OK’d nine rate hikes by SCE&G to help pay for the construction of two new nuclear reactors at V.C. Summer.

SCE&G customers already have paid $1.7 billion toward the now-aborted project and could be charged up to $2.2 billion more.

Over the past few years, as South Carolinians’ electricity bills rose and the V.C. Summer project quietly veered toward abandonment, PURC gave PSC members and ORS director Scott high marks in its annual reviews, records show.

“They’ve obviously failed to assure that we have competent, independent, assertive regulators on the Public Service Commission and on the Office of Regulatory Staff,” Bob Guild, an attorney for the S.C. Sierra Club who challenged the nuclear project for years, said of PURC.

State Rep. James Smith, D-Richland, agreed.

“You can draw no other conclusion than: This is broken,” said Smith, who Thursday announced he would run for governor. “It should fundamentally protect ratepayers.”

Smith told The State newspaper he soon will file a bill that prohibits regulated utilities from contributing to lawmakers’ campaigns. The goal, he said, would be to curb the influence those utilities wield at the State House.

“Government should do right. But it should also look right because that builds confidence in South Carolinians that it’s working for them,” Smith said. “We don’t have that.”

Others critics have suggested PURC be eliminated and its responsibilities transferred to the state’s executive branch, where the governor or another statewide official could be held accountable by voters.

‘An excellent job’

PURC members and other observers say that criticism is unfair.

PURC member Rankin, an Horry County state senator, said the committee does a good job of vetting applicants for the PSC and is an improvement from the previous system, in which the entire General Assembly voted on candidates in what amounted to a popularity contest.

Rankin and others also defended PURC’s positive annual reviews of state regulators overseeing the V.C. Summer project.

Under state law, Rankin said, PURC can’t second-guess the PSC’s rate hike decisions. Also, no one at PURC knew of the problems at the V.C. Summer site, which were hidden from state regulators by the two utilities in charge, Rankin said.

“PURC does an excellent job,” said Mike Couick, chief executive of the state’s Electrical Cooperatives. “They have got an incredible regulatory system that has lots of successes. It has one noticeable failure in that Summer Units 2 and 3. I don’t believe that much of that is attributable to things they could have controlled or influenced.”

State Sen. Thomas Alexander, the Oconee Republican who chairs PURC, said he had not heard any concerns about the PSC’s performance until recently. He suggested PURC could improve its performance by developing stronger criteria or questions for its evaluations of PSC members.

But Alexander and other legislators were unsure about the idea of prohibiting utilities from donating to lawmakers’ campaigns.

“I’m not sure what we would solve with that,” the Oconee Republican said. “We just have to look at that piece of legislation.”

Avery G. Wilks: 803-771-8362, @averygwilks

Who got it?

Utilities, their subsidiaries and employees have contributed at least $294,000 since 2005 to the campaigns of legislators who control the Public Utilities Review Committee, which screens members for the state board that OKs or rejects rate-hike requests by utilities. Here’s how much each legislative received while they on PURC.

▪ Former state Sen. Tommy Moore, D-Aiken (2005-07): $116,550

▪ State Rep. Bill Sandifer, R-Oconee (2005-present): $69,000

▪ State Sen. Luke Rankin, R-Horry (2006-present): $33,050

▪ State Sen. Thomas Alexander, R-Oconee (2005-present): $21,250

▪ State Rep. Mike Forrester, R-Spartanburg (2011-present): $18,750

▪ Former state Rep. Harry Cato, R-Greenville (2005-10): $14,000

▪ Former state Rep. Harry Ott, D-Calhoun (2006-13): $9,900

▪ State Sen. Brad Hutto, D-Orangeburg (2008-present): $8,400

▪ State Rep. Jackie Hayes, D-Dillon (2014-16): $2,750

▪ State Rep. David Mack, D-Charleston (2017-present): $0

▪ Former state Sen. James Ritchie, R-Spartanburg (2005): $0

▪ Former state Rep. Brenda Lee, D-Spartanburg (2005): $0

Who paid for it?

Most of the contributions to those legislators came from three sources:

▪ Electric cooperatives: $122,000

▪ SCANA: $81,500

▪ Duke Energy: $75,000

SOURCE: The National Institute on Money in State Politics