Six of the Lawmakers Investigating Utilities Also Oversee Utility Regulators

South Carolina State House Happenings

Shortly after Santee Cooper and SCANA abandoned their joint project to build two nuclear facilities, SC legislative leaders created special committees in the House and Senate to investigate the failed project. The abandoned plants have already cost South Carolinians billions of dollars and, according to a law passed in 2007, will continue to do so even though they will not be completed.

Senate President Pro Tempore Hugh Leatherman and House Speaker Jay Lucas created the investigative committees and appointed their members – six of whom currently serve on the board responsible for overseeing the utility regulators. The Public Utility Review Commission (PURC) not only nominates the members of the Public Service Commission (PSC) but evaluates their performance, as well as that of the Office of Regulatory Staff (ORS) which is supposed to serve as the consumer advocate.

In other words, six legislators who have ultimate control over the state’s utility regulators are also on the committees investigating those regulators.

These committees recently held several hearings in which they questioned some of the parties responsible for the project, including:

  • Executives of SCANA (parent company of SCE&G)
  • Executives and Board Chair of Santee Cooper
  • ORS director and staff (ORS was supposed to serve as the citizen advocate, and as such had the authority and responsibility to investigate any concerns about the project)

Curiously, the committees have not questioned the members of the PSC – the regulatory board with direct authority over private utilities, including approval and oversight of every stage of the nuclear plant project. The PURC appoints and oversees the PSC, as well as the director of the ORS, which was responsible for additional oversight of the nuclear project and was required to audit the project’s quarterly reports.

The PURC is comprised of six lawmakers and four citizens, who are appointed by the House speaker and the Senate judiciary chairman (the chairman of the House Labor, Commerce and Industry Committee serves automatically).

The utility investigatory committees have enormous power, including the ability to issue subpoenas and swear in witnesses under oath. In addition, when the legislature created the Department of Administration in 2014, lawmakers slipped in a new crime called “contempt of the General Assembly,” which makes it a felony to provide testimony to certain legislative committees that is “false, materially misleading, or materially incomplete.” There is no clear definition of those terms, leaving it up to legislators on the committee to decide if a witness is not giving “complete” testimony. The committee chairman then alerts the SC Attorney General, who is legally required to see that charges are filed in the appropriate county.

That sort of power – which constitutionally belongs to the executive and judicial branches, who are also required to protect citizens’ rights during the investigatory and court processes – could easily serve as a powerful deterrent to honest testimony about the role of powerful legislators (who control the energy system) in the failed nuclear project.

Both state government entities involved in project oversight are ultimately accountable to the PURC, and PURC members are accountable only to the House Speaker and Senate President.

Even if these legislators made a good faith effort not to steer the investigation away from themselves – a valid concern considering that the PURC lawmakers had the duty of ensuring that the PSC and ORS were vigilant in their oversight of the nuclear project – the public cannot reasonably be assured of an objective, thorough investigation when six of the “investigators” are the same legislators who supervise the testifying regulators.

In fact, at no time in the weeks-long hearing process have any of the lawmakers who control the energy system been called upon to testify. And while executives of SCANA – a private company not subject to legislative investigatory oversight – were questioned multiple times, the members of the PSC were never required to testify even though it was the PSC that oversaw and approved every stage of the project.

 

Abuse of Power by Quasi-Judicial Investigatory Committees

State law gives the House speaker and Senate president pro tem authority to convene special investigatory committees. However, these investigations must be into the functions, duties, and activities of state agencies.

This power is from a law requiring the legislative committees to review all state agencies once every seven years. The law goes on to say that the House speaker and Senate president pro tem can authorize unscheduled “legislative investigations into agencies’ functions, duties, and activities.” Clearly, this law was designed to provide accountability for state government, not private companies or events.

However, the Senate president pro tem charged his committee to “review all aspects” of the failed V.C. Summer nuclear construction project, “the chain of decisions” made by the management of SCE&G (a private company) and Santee Cooper, and the actions of the regulatory agencies – specifically the Public Service Commission (PSC) and the Office of Regulatory Staff (ORS). The House Speaker’s instructions to the committee stated that “the only responsible path forward is to comprehensively study the issue” and “determine a viable plan” that protects the ratepayers. Specifically, the House committee was to review and potentially repeal the Base Load Review Act and examine the PSC’s authority.

Legislative oversight committees – and special investigatory committees – have broad power to conduct their agency reviews, including:

  • Demanding information from state agencies, which must be answered under oath and within forty-five days
  • Examining any witness the committee believes has knowledge of “the activities under investigation,” all of which must be under oath
  • Issuing subpoenas to state agencies, departments, boards and commissions
  • Have witnesses criminally charged with “contempt of the General Assembly,” which is vaguely defined, determined by the committee and a felony

None of these powers were intended to allow lawmakers to target private companies. Nor do the oversight committees have power to subpoena private citizens, although if a private citizen complies with an invitation to testify, as SCANA executives did, that testimony must be under oath and is subject to a possible charge of contempt of the General Assembly.

Furthermore, by allowing legislators to put private citizens under oath, thus making them subject to the “contempt” charge, lawmakers set a dangerous precedent that could ultimately open the door to subpoenaing and questioning private citizens.

 

Legislative Members of PURC: Regulators and Judges

Because PURC screens and nominates the PSC members, selects the ORS executive director and screens the Santee Cooper board of directors before their appointment, all state agencies involved in the regulatory process are ultimately controlled by PURC, which has additional authority to conduct an annual performance review of each PSC member, the PSC as a whole and the ORS director. Those reviews are legally required to be submitted to the General Assembly. PURC also has statutory authority to “undertake such additional studies or evaluations as the review committee considers necessary.” In fact, the primary responsibility of PURC is to help the General Assembly determine if energy regulators are acting in the best interest of the state.

If PURC properly executed its statutory responsibilities, it should have known about the problems facing the V.C. Summer nuclear construction project long before they were reported to the public, and should have informed the General Assembly. As the board with ultimate authority over the entire system and project – second only to the House speaker and Senate judiciary chairman – the PURC members should be testifying before the investigatory committees instead of sitting on them.

As long as the PURC members are on the committees, it is unlikely that the investigation will be focused on the culpability of the state’s most powerful politicians. But in fact, it is those lawmakers who bear the full responsibility to the citizens for the billions of dollars already spent and borrowed that, absent dramatic change, the ratepayers will be on the hook to repay.

 

What Citizens Should Demand from These Committees

The committees may have finished questioning witnesses for the purposes of the investigation (though as long as these committees exist, they retain the power to resume the investigatory process and issue subpoenas), but they are still charged with proposing recommendations to the legislature. Before the committees recommend any action – whether it be legislation or further investigation – the public deserves a full report of their findings, including the evidence supporting their conclusions, and the rationale for any proposed changes to the laws. The hearings were supposed to be for the benefit of the public, not lawmakers themselves.

If the report is to be trusted as objective, then the six legislators who serve on PURC should be removed from the committees immediately by the Senate President Pro Tem and the Speaker of the House, who appointed them in the first place (in fact, the Speaker also appoints the House members on the PURC).

The public has good reason to question the practices of PURC members. In August, the PURC abruptly issued a brief statement that it was suspending the process (which includes public hearings) to screen candidates for election to the Public Service Commission. The reason given was to allow the investigation committees to finish their work first. That alone should have raised red flags about the participation of PURC members in the investigatory process.

As the committees consider solutions, citizens should demand full transparency and a full report of the findings. There should be no further action by the committees or the legislature until the six lawmakers who serve on PURC are removed from the committees, and a full report has been issued for the public to study and debate.

The public officials in charge of the project have already put South Carolina citizens on the hook, not only for the billions already spent on the project but for the billions in debt incurred by both SCANA and Santee Cooper to build the plants. It is time for the rest of our public officials to step up and take responsibility to ensure a full investigation to uncover the truth, which can only happen when impartial parties are focused on the legislative leaders who forced utility customers to pay for energy sources they will never use, and who bear full responsibility to the people of South Carolina for the oversight and management of the project.

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