What S.C. lawmakers aren’t telling the public about the failed V.C. Summer project

January 10, 2018

Investigative Reports

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By RICK BRUNDRETT

Last summer’s stunning news that South Carolina Electric & Gas and its partner, state-owned Santee Cooper, would abandon a major expansion of the V.C. Summer nuclear plant – after some $9 billion was sunk into the project – sent public officials scrambling for answers in the wake of public outrage.

State and federal criminal investigations were launched after an internal report prepared for the utilities and detailing major problems with the project was publicly released.

S.C. Senate President Pro Tempore Hugh Leatherman, R-Florence, and House Speaker Jay Lucas, R-Darlington, quickly appointed their own special investigatory committees. Legislative hearings were held over the next several months, and bills that purport to fix the system were awaiting lawmakers as they returned Tuesday for the first day of the 2018 legislative session.

To date, though, neither special legislative committee has issued a report or summary of its findings to the public.

And there has been little, if any, public attention paid to this fact:

The two special investigatory panels – the Senate’s 12-member “V.C. Summer Nuclear Project Review Committee” and the 20-member “House Utility Ratepayer Protection Committee” – include six lawmakers who play critical roles in South Carolina’s energy regulatory structure – a system that was supposed to be monitoring the failed nuclear project and protecting ratepayers.

Contacted Tuesday morning, Leatherman, who also is the Senate Finance Committee chairman, declined comment on his special committee appointments. “I don’t have anything to say to The Nerve,” he said.

During a Senate floor speech later Tuesday, Leatherman announced that he would reconvene the Senate’s investigatory committee to discuss a proposed $14.6 billion merger involving Virginia-based Dominion Energy Inc. and SCANA Corp., the parent company of SCE&G. Lucas, who didn’t respond to a request by The Nerve for comment, said in a prepared statement Tuesday that the special House committee also would be reconvened.

The special Senate and House panels collectively include all six lawmakers who are members of the joint “State Regulation of Public Utilities Review Committee,” or “PURC” for short, a 10-member committee that screens candidates for the S.C. Public Service Commission, which regulates private utilities. The General Assembly elects PSC candidates nominated by PURC, whose members are selected by the House speaker and Senate Judiciary Committee chairman.

So why is PURC important now?

The seven-member PSC nominated by PURC for years routinely authorized, under a 2007 state law known as the Base Load Review Act, utility rate hikes for SCE&G customers to build two new nuclear reactors at the V.C. Summer plant in Fairfield County, as The Nerve reported in 2012.

The Nerve in 2014 raised questions about whether the PSC was secretly meeting in smaller groups to approve rate hikes for SCE&G and Duke Energy. Six of the seven commission members each receive an annual salary of $107,822; its chairman makes $109,726 yearly, according to the state salary database.

The Nerve in September reported, citing a one-sentence notice on the Legislature’s website, that PURC’s screening process of the PSC had been suspended “until further notice.” A reason wasn’t specified on the website, though a Senate Judiciary Committee staffer said then the process was suspended to “allow the respective (special legislative investigatory committees) to do their work,” and that conducting the PSC screening process simultaneously would be “redundant.”

PSC elections in the Legislature were still planned for February, the staffer said.

Under a 2004 state law, PURC has almost total control over the regulation of private utilities in South Carolina. PURC members not only nominate candidates to the PSC, but they also are charged with annually evaluating them individually and as a group.

Furthermore, PURC in essence hires and oversees the executive director of the state Office of Regulatory Staff, which, among other duties, is supposed to represent ratepayers’ interests. While the governor technically makes the appointment, the law says PURC must submit only one “qualified” candidate for consideration.

The six PURC lawmakers currently serving on the Senate’s or House’s special committees investigating the V.C. Summer debacle include:

  • Sen. Thomas Alexander, R-Oconee and the PURC chairman. Alexander also chairs the Senate’s Labor, Commerce and Industry Committee;
  • Sen. Luke Rankin, R-Horry and the Senate Judiciary Committee chairman;
  • Sen. Brad Hutto, D-Orangeburg;
  • Rep. Bill Sandifer, R-Oconee and the PURC vice-chairman. Sandifer also is chairman of the House Labor, Commerce and Industry Committee;
  • Rep. David Mack, D-Charleston; and
  • Rep. Mike Forrester, R-Spartanburg.

Under state law, the committee includes the House LCI chairman or his designee, and the Senate Judiciary Committee chairman or his designee. The House speaker and Senate Judiciary Committee chairman select their respective legislative and non-legislative committee members.

Candidates for the Public Service Commission are screened and nominated by PURC, and elected by the General Assembly. Four of the seven PSC members have served on the commission over the active life of the V.C. Summer project.

PURC exerts a great deal control over the PSC, including the nomination process. In 2014, The Nerve raised questions about PURC member Sandifer’s handling of the screening of a candidate for the PSC. In questioning the female candidate, Sandifer grilled her about whether it would be good for her three underage children if she were appointed to the commission. PURC found the candidate unqualified despite rating her as “outstanding” in an earlier hearing.

In a separate 2014 story, The Nerve found not one negative comment or even a suggestion for improvement in any of PURC’s written performance evaluations of PSC members covering fiscal years 2007 through 2013.

“I certainly can understand the criticisms of PURC,” said Senate Majority Leader Shane Massey, R-Edgefield and co-chairman of the special Senate committee investigating V.C. Summer, when contacted Tuesday by The Nerve, though he added he believes that PURC lawmakers serving on the special committee were “helpful because they knew what questions to ask.”

Asked if the special committee planned to issue a report to the public, Massey replied, “I don’t think you’re going to see a specific written report from our committee on this.”

In addition to the PURC members on the special Senate and House committees, at least one member of the Senate panel has some apparently unique ties to the utility industry.

Campaign contribution records reviewed by The Nerve show that Sen. Paul Campbell, R-Berkeley and the Senate Ethics Committee chairman, received a dozen contributions from utility-related interests in October 2009 that went beyond a typical single campaign contribution from a company. The campaign donors included current SCANA CEO Jimmy Addison; Kevin Marsh, SCANA’s immediate past chief executive; William Timmerman, a former SCANA CEO and board chairman; and Leighton Lord, Santee Cooper’s immediate past board chairman, records show.

Campbell, who currently is the chief executive of the Charleston County Aviation Authority, also appeared several years ago in a SCANA-sponsored commercial touting alternative forms of energy, including nuclear energy.

Contacted Tuesday by The Nerve, Campbell, a retired regional Alcoa president, defended his role on the special Senate investigatory committee.

“I ran aluminum plants, plants that consumed a lot of energy,” he said, noting he is “data-driven” and adding, “I don’t think anyone on the (special Senate investigatory) committee is biased one way or the other.”

Besides the work being done by the special Senate and House panels, the State Law Enforcement Division and the FBI are conducting investigations into the failed V.C. Summer project, though agency spokesmen contacted this week by The Nerve declined to comment on any specifics.

Brundrett is the news editor of The Nerve. Contact him at 803-254-4411 or rick@thenerve.org.