Taxpayer cost grows for high-priced consultants in wake of V.C. Summer fiasco

February 12, 2019

Investigative Reports

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By RICK BRUNDRETT

Since the 2017 collapse of the V.C. Summer nuclear project – which the Legislature made possible through a quietly passed law 10 years earlier – lawmakers and state utility regulators collectively have spent at least $729,000 on consultants hired to give them advice or issue reports.

The total includes $379,203 this fiscal year paid by the House and Senate chambers to Virginia-based ICF. The consulting firm released a report earlier this month on proposals by unidentified potential buyers to purchase all or parts of state-owned Santee Cooper, the minority partner with South Carolina Electric & Gas in the failed $9 billion nuclear project.

House Clerk Charles Reid and Senate Clerk Jeff Gossett provided the latest ICF payment figures on Monday to The Nerve, though they didn’t respond to follow-up questions on specifics of the payments and potential future consulting costs.

In an email response, Gossett said there was “no direct appropriation” under a state budget proviso for this fiscal year, which started July 1, creating the “Public Service Authority Evaluation and Recommendation Committee” to study the proposed sale of Santee Cooper. He said ICF was “engaged as the consultant to the committee,” and that the House and Senate “each are paying half of any expenses.”

The nine-member committee includes Gov. Henry McMaster, who has publicly pushed for the sale, and is co-chaired by Sen. Paul Campbell, R-Berkeley, chairman of the Senate Agriculture and Natural Resources Committee; and Rep. Murrell Smith, R-Sumter, the House Ways and Means Committee chairman.

The Nerve last year reported, citing Santee Cooper records, that the utility’s total debt load, including V.C. Summer IOUs, was projected at $15 billion with interest if paid over 40 years. The Nerve also revealed that an obscure, five-member Santee Cooper advisory committee, which includes the governor and four other statewide elected officials, never met over the years to discuss the now-abandoned nuclear project.

Last fiscal year, the House and Senate paid a total of $70,219 to ICF, records show. Gossett told The Nerve then lawmakers were advised verbally about the “value of Santee Cooper,” though he didn’t respond to questions seeking more details about ICF’s services.

The Senate in fiscal 2018 also paid Washington, D.C.-based Bates White Economic Consulting a total of $152,428 for a report that concluded that SCE&G could temporarily cut electric rates by 13 percent, or about $19 monthly, for typical residential customers, without being forced into bankruptcy, as The Nerve reported last April. The House initially proposed temporarily suspending the full V.C. Summer portion of SCE&G bills – about $27, or 18 percent, for typical residential monthly bills.

The state Public Service Commission in December approved Virginia-based Dominion Energy’s purchase of Cayce-based SCANA Corp., SCE&G’s parent organization. The deal included an offer to cut monthly electric bills by about $22 on average, though SCE&G customers, who collectively have paid more than $2 billion for the failed nuclear project, would continue paying an average of about $5 a month over 20 years for the unfinished reactors.

The PSC authorized nine SCE&G rate hikes over the years for the nuclear project under the Base Load Review Act, which lawmakers quietly approved in 2007. PSC members are screened and nominated by a legislatively controlled committee called the State Regulation of Public Utilities Review Committee (PURC), which exerts considerable control over the regulation of utilities in South Carolina.

Besides the $152,428 paid last fiscal year to Bates White, the House and Senate also collectively have paid $62,272 this fiscal year to the firm, state comptroller general records show. Gossett said Monday those payments were for “their engagement as experts” in a federal lawsuit between SCE&G and the PSC, in which the Legislature “intervened.”

In addition, the state Office of Regulatory Staff, which over the years signed off on SCE&G rate hikes approved by the PSC, paid Bates White $52,000 this fiscal year, according to comptroller general records. Those payments were for a report that ORS “commissioned regarding securitization that we used in our testimony before the PSC during the abandonment/merger proceedings in November,” ORS spokesman Ron Aiken said in an email Monday to The Nerve.

The Legislature last week elected an ORS attorney and former longtime PSC staffer to fill a $107,822 PSC seat held by another lawyer who had voted for SCE&G rate hikes for the V.C. Summer project.

Since last fiscal year, the Senate has paid a total of $12,940 to Maryland-based Stark Energy Consulting LLC, comptroller general records show. Gossett on Monday said the firm was “assisting Bates White with their analysis and report” that was issued last year.

In total so far, payments to the three consulting firms in the wake of the V.C. Summer debacle come to $729,064.

And the House and Senate chambers are flush with taxpayer money. The Nerve in September reported that the 124-member House had a $25 million general-fund surplus as of the start of the fiscal year on July 1 – almost $2.9 million more than its fiscal 2018 budget. The 46-member Senate carried over $6.1 million into this fiscal year – 43 percent of its 2018 budget.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

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