Public Service Commission Secretly Approving Rate Hikes?

March 31, 2014

Investigative Reports

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By RICK BRUNDRETTclosed meeting

 

From May 2005 through last Oct. 30, the S.C. Public Service Commission raised the average electric bill for SCE&G residential customers 21 times.

From October 2005 through Jan. 1, the average bill for Duke Energy Carolinas residential customers using the same amount of electricity (1,000 kilowatt hours per month) was raised 14 times, The Nerve found in a review of rates published by the state Office of Regulatory Staff.

For the period, the increases in average monthly bills for each of the two large utilities totaled more than 20 percent above inflation.

The Public Service Commission (PSC) is a seven-member panel elected by the General Assembly and screened by a legislatively controlled committee. It regulates investor-owned utilities, including the setting of utility rates for residential and business customers.

Although final decisions of the PSC are made public, the commission apparently meets secretly beforehand in smaller groups when deciding rate cases, based on little-known testimony last year from Commission Chairman G. O’Neal Hamilton, The Nerve’s review found.

Hamilton testified during his screening hearing for re-election that the PSC typically meets in smaller groups to reach a “consensus” before final rulings are issued by the full seven-member body, suggesting that it wasn’t a violation of the state Freedom of Information Act (FOIA) if three commissioners met at a time before a final decision was made.

The law, however, doesn’t allow smaller-group meetings without public notice or for decisions on rate cases to be made behind closed doors, according to Jay Bender, attorney for the South Carolina Press Association. The Nerve through its parent organization, the South Carolina Policy Council, is an associate member of the Press Association.

“The way they’re doing it appears to be illegal,” Bender said when contacted last week by The Nerve. “Each of those smaller groups seems to be a committee, and a notice (of public meetings) has to be given, and discussion would have to be done in public.”

Secret Meetings Generally Banned

The FOIA  defines a “public body” as not only the governing body of a state or local agency, but also “committees, subcommittees, advisory committees and the like of any such body by whatever name known.” The law also says a “chance meeting, social meeting, or electronic communication” can’t be used in “circumvention of the spirit of requirements” of the FOIA.

The FOIA states that “(e)very meeting of all public bodies shall be open to the public” unless specifically exempted by law. Discussions of “compensation” involving a “person,” which, by definition, includes a corporation, can be done secretly under the FOIA, but Bender said even if PSC members are allowed to discuss proposed rate hikes in closed session, the law bans them from taking any action in secret except to adjourn or return to public session, or from “polling” members to commit to a particular action in rate cases.

A governing body must vote publicly to go into a closed session, and the presiding officer must announce the specific reason for meeting secretly, under the FOIA.

Bender cited several S.C. Supreme Court cases supporting open meetings. For example, in a 1992 ruling known as the Business License Opposition Committee v. Sumter County, the court said, in voiding a business-license tax ordinance, that the Sumter County Council violated the FOIA by holding a secret meeting before a public meeting to adopt an amendment to the ordinance.

The Nerve last week left written and phone messages seeking comment from Hamilton, who makes $104,286 as the commission chairman, but received no response. Hamilton, a retired Farm Bureau agency manager who served on the Bennettsville City Council from 1992-2004, joined the commission in 2004, was elected its chairman in 2006 and re-elected chairman last year, according to the PSC website.

“He’s not allowed to elaborate on his statements (given during last year’s screening hearing),” said Jocelyn Boyd, the PSC’s chief clerk and administrator, said when contacted Friday by The Nerve. “Of course, I don’t have a comment about his testimony.”

Boyd said PSC members, whose positions are considered quasi-judicial though  commissioners, such as Hamilton, don’t have to be lawyers, as well as PSC staff, are bound by the state Code of Judicial Conduct – the ethical rule book for judges.

Boyd requested that The Nerve put additional questions in writing about the PSC’s process of deciding rate cases, though she didn’t respond by publication of this story. Those questions included whether the PSC has ever met privately with three or fewer commissioners since 2004 to decide rate cases.

Asked about Hamilton’s testimony last year, Dukes Scott, executive director of the Office of Regulatory Staff, which represents the public in rate cases before the PSC , told The Nerve on Friday, “That’s probably something I wouldn’t get involved with,” adding, “I think the commission does a good job.”

Still, when questioned about his experience when he was a PSC member in 1990s, Scott, an attorney, replied: “If I were going to discuss something, the meetings were open. … The meetings were longer back then, but that’s how we did it.”

Scott said in many rate cases, the PSC approves a settlement agreement among the parties, which typically involves his office. In cases in which rates are increased, the final figures usually are lower than what the utilities initially requested, he said.

“Generally speaking, the cases are unanimous,” he said when asked about PSC voting patterns.

‘Unity in our rulings’

During a Feb. 12, 2013, screening hearing for re-election to his seat, Hamilton initially said under questioning by an attorney for the screening committee that three of the seven commissioners “can get together and discuss the issues,” according to a hearing transcript reviewed by The Nerve last week.

“And we keep splitting around,” Hamilton continued, “and we end up with a consensus that we feel is in the best evidence [sic] for the company and the rate payer.”

Hamilton noted that in typical utility rate cases, “we have six months from start to finish to issue an order,” adding, “And this I think is the fastest time scale in the nation.”

Later, under questioning by Rep. Bill Sandifer, R-Oconee and vice chairman of the 10-member screening committee known as the “State Regulation of Public Utilities Review Committee” (PURC), Hamilton said commission members “normally meet in small groups that would not violate” the state Freedom of Information Act.

“And we attempt to have unity in our rulings, and we have basically in most instances been able to do that,” Hamilton said. “And we discuss the matter. We all have our own opinion. We study the pros and cons of it, and we attempt to come up with a resolution that is best for all concerned.”

Under questioning by Sandifer, Hamilton said commissioners are “on duty 24 hours a day because we have the state phone and I-Pad that we constantly contact,” adding, “If anything comes up with the commission that they need you to be a part of, they need your attention on, we know immediately and we keep in contact.”

The Nerve earlier this month revealed transcripts of another screening hearing the day before Hamilton’s hearing in which Sandifer questioned a female PSC candidate about how her three underage children would be affected if she became a commissioner, and if she had discussed her candidacy with her children.

At the end of the Hamilton’s hearing, Rep. Mike Forrester, R-Spartanburg and a PURC member, raised concerns about Hamilton’s earlier answers.

“Do you see that as actually just a better procedure than meeting in an open session where the public can see all seven of you and converse and come to a decision?” Forrester asked Hamilton, adding “because it sounds to me like you almost have invented a way to get around” the FOIA.

Hamilton denied skirting the law, explaining: “We would be happy to meet in a group and with the public. We don’t hide in transparency at all, but under the structure that we live (with) we haven’t seen that as an available way to do it.”

When it wants to, the PSC knows how to get things done quickly in public meetings.

The commission, for example, in 2012 gave approval in less than 10 minutes to a $32 billion merger between Duke Energy and Progress Energy, according to media reports and a Duke Energy press release.

Hamilton read a two-page motion at the meeting approving the plan. The seven commissioners approved the agreement on a voice vote and quickly adjourned.