ONE REASON the Legislature ordered the Public Service Commission to temporarily slash our power bills was that some lawmakers didn’t think they could trust the commissioners to do that on their own, despite the strong legal and constitutional case from the Office of Regulatory Staff and the attorney general.
It’s easy to understand why when you look at the PSC’s order allowing notorious polluter Carolina Water Service to charge its customers nearly $1 million in legal fees, much of that money to defend against a lawsuit it lost for unlawfully releasing poorly treated sewage into the scenic lower Saluda River.
The commission concluded that the utility should be able to charge its ratepayers instead of its owners for attorney fees because it “had no choice” but to fight the lawsuit.
I disagree with the idea that anyone who’s in the wrong should fight a lawsuit. Still, it’s an argument that might not be terribly offensive if Carolina Water Service operated in the free market, where its customers had the option of taking their businesses elsewhere.
But of course Carolina Water Service is a regulated monopoly. Which is to say, its customers have to remain its customers, and they have to pay whatever the PSC says they have to pay. Which, at least in my mind, makes the utility like government when it comes to lawsuits: It has a duty to the public, and so it is completely unacceptable to fight legitimate complaints.
Late last month, the state Office of Regulatory Staff asked the commission to reconsider its decision about the attorney fees and five other matters. The request — demonstrating what an aggressive consumer advocate the office can be when it isn’t required to protect the financial interests of regulated monopolies — condemns the commission every bit as much as it condemns Carolina Water.
The company, unsurprisingly, disputes most of the ORS’ factual charges, creating a he-said, she-said kind of dispute.
I have more confidence in the accuracy of ORS’s account than Carolina Water’s, but let’s set aside the questions about how many of the PSC’s conclusions broke with years or decades of precedent. Instead let’s focus on what appears to be undisputed: The Public Service Commission had the discretion to either allow the utility to charge ratepayers for the litigation costs or to deny it, and it chose to allow it.
And now let’s step back and contemplate this situation.
Imagine you’re a commissioner who is under intense scrutiny from state leaders and ordinary citizens, who are outraged that you allowed SCE&G to raise rates nine times in less than 10 years to pay for the over-budget, behind-schedule construction of two nuclear reactors that the utility eventually abandoned, mid-construction. Your overpaid job is on the line.
Now imagine that a notorious polluter asks permission to hand ratepayers the legal bill it ran up fighting a lawsuit. A lawsuit that it lost, which suggests that it really did violate the federal Clean Water Act when it dumped poorly treated sewage into a sensitive waterway where people love to fish and cavort. Imagine too — as the Office of Regulatory Staff asserts and Carolina Water doesn’t seem to dispute — that you’ve never before allowed utilities to charge their customers for legal costs for cases they lose, only cases they win.
Imagine, whether there truly is no precedent for such rulings or not, that you have the discretion to either approve or deny that request. While you’re under that intense scrutiny and legislators are on the verge of firing you.
Would you approve it? And justify that approval by saying the utility had no choice but to run up a huge legal bill defending its pollution? By saying that in fighting the lawsuit instead of admitting it was wrong, the monopoly utility was justifiably attempting to “limit exposure to liability and benefit the utility and its rate payers”?
It makes you wonder what’s going on in the commissioners’ heads.
Did they figure the Legislature was about to sack them anyway, so they might as well just do whatever favors they can for the utilities they favor?
Or did they — like the just-exonerated Bill Clinton in that classic Saturday Night Live skit — figure they’re bulletproof? That only Kryptonite can stop them? That is, that they and SCANA had enough support in the Legislature that they’ll be able to continue business as usual? No matter what they do?
I’ve spent a lot of time in the past 11 months defending the Public Service Commission, saying I didn’t think the 2007 Base Load Review Act left it much if any discretion each time SCANA asked to raise its rates to pay for the over-budget, behind-schedule nuclear construction project that it abandoned last summer. I still think that’s more true than not.
But even when I set aside all the other outrageous stuff the Office of Regulatory Staff claims the commission did in its Carolina Water decision, this case is making me wonder if maybe there were some things the commissioners could have done to rein in SCANA’s “spend more, profit more” approach to building nuclear reactors. It makes me wonder if the commission couldn’t do more now to help the ORS and the attorney general and consumer groups and corporate customers get their hands on information that could show what SCANA knew and when it knew it.
And it erases any nagging questions about whether it was smart for the Legislature to set some rules for the commission: It most certainly was.
Here are some related pieces I’ve written that you might find helpful:
Ms. Scoppe writes editorials and columns for The State. Reach her at firstname.lastname@example.org or (803) 771-8571 or follow her on Twitter or like her on Facebook @CindiScoppe.