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Too cozy with regulators

John A. Carlos II (copy) (copy)

A SCANA Corp. lawyer appears before the S.C. Public Service Commission in December. 

Attending a conference might not sound like much of a “gift.” But when you consider the plane tickets, hotel rooms, fancy dinners, golfing, tours and other frills that go along with it, then the picture quickly comes into focus. Those expensive items should certainly be viewed as gifts, and if they aren’t off limits under the state ethics law, then they should be.

On Sunday, The Post and Courier reported that members of the state Public Service Commission, which regulates utilities, received at least $140,000 over the past five years to pay for conference costs, speaking fees and related expenses.

Most of that money went unreported on ethics filings, though at least some PSC members are now updating their ethics forms to reflect that conference expenses were covered by utilities and industry groups.

In other words, the relationship between state regulators and the industries they are supposed to regulate is far too close for comfort. That relationship merits fresh scrutiny in light of the PSC’s role in the state’s failure to avert catastrophe for South Carolina ratepayers as SCE&G and its parent company SCANA spent billions in ratepayer money on two now-abandoned nuclear reactors.

The PSC approved nine rate hikes related to that project even as evidence mounted that the new reactors were far behind schedule and billions of dollars over budget. The PSC has made the argument that their hands were tied by the Base Load Review Act, which provided for the pay-as-you-go scheme designed to enable the reactor construction at a much diminished price. Instead, ratepayers could be left holding the bag for $9 billion.

But the law does allow the PSC to reject the rate hikes if it is determined that the utilities acted imprudently. Certainly, the economic disaster that continues to unfold gives every indication of imprudence on the part of the utilities’ leadership. Commissioners will have the chance in coming months to save ratepayers billions by determining that some of the costs SCANA incurred were not “prudent” and cannot be passed along to customers.

Nuclear project partner Santee Cooper is a state agency not regulated by the PSC.

Certainly, regulators need to be informed about the industries they oversee and well versed in the perspectives of both utility companies and the customers they serve.

But Sunday’s report paints a picture of industry conferences as luxurious vacations, with lots of outside perks and opportunities for off the record face time between utility power players and state regulators. And commissioners spent plenty of time on the road — 80 conferences in 40 cities in five years. Taking the most charitable view, that’s more than necessary to simply stay abreast of pressing issues facing utilities and utility customers. And the PSC record on the reactor debacle suggests that they didn’t learn as much as they should have about the most important utility issues facing this state.

State law should ban PSC commissioners from accepting gifts from the people they regulate, their lobbyists or other factotums — period. And state ethics rules should be updated to reflect the fact that conferences and speaking engagements are “gifts” when they include costly perks.

Regarding the former, Charleston representatives Peter McCoy, a Republican, and Leon Stavrinakis, a Democrat, have prefiled a bill that outlaws gifts to state regulators. It warrants approval as part of a package of legislation related to the failed nuclear effort.

As South Carolina wrestles with the aftermath of one of the worst economic disasters in state history, ratepayers must be able to trust the people in charge of regulating the utilities responsible for that catastrophe. Instead, the PSC looks more like a captive agency that willingly does the utilities’ bidding.

And the willingness of most PSC members to enjoy the generosity of utility interests at conferences around the country doesn’t inspire any confidence that they will yet rise to the occasion.

Given the PSC’s obligation to protect ratepayers, it’s critical that strict separation be maintained between regulators and the utilities they oversee.

Several lawmakers called for commissioners to resign on Tuesday, and with good reason. Restoring confidence should be a top priority.

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