The S.C. Legislature spent more than $70,000 for an outside consulting firm to give it “advice” late last year relating to the V.C. Summer debacle – a financial quagmire that lawmakers played a large role in creating.
The Virginia-based firm was paid by the House and Senate without producing a report for lawmakers, Senate clerk Jeff Gossett told The Nerve this week.
The Senate also retained two other consulting firms for related “advice,” according to Gossett – one of which recently released a report concluding that South Carolina Electric & Gas could temporarily cut electric rates by 13 percent without being forced into bankruptcy.
The Senate has yet to receive a written report from the other firm, and neither has submitted invoices, Gossett said in an email Thursday. He didn’t say what their estimated costs are, though he noted the Senate would pay consultants’ fees out of the chamber’s “other operating expenses account.”
This year’s total nearly $14.6 million budget for the Senate chamber includes $300,000 in “other” funds. Both chambers are flush with taxpayer money: The Senate carried over more than $7.3 million in general funds into this fiscal year, which started July 1, while the House carried over $25.9 million – nearly $3.7 million more than its total adopted budget for this fiscal year, state comptroller general records show.
ICF Resources LLC, a subsidiary of Fairfax, Va.-based ICF International Inc., billed the Senate and House a total of $70,219, mainly for 136.5 hours of work from Oct. 31 to Dec. 31, according to an invoice provided this week to The Nerve under the state Freedom of Information Act. The invoice listed the work was done by an unnamed executive director, two consultants, a researcher and a “principal.”
“I believe their advice was delivered verbally,” Gossett replied in an email when asked by The Nerve if ICF produced a written report.
Gossett said the advice pertained to the “value of Santee Cooper,” the state-owned utility and minority partner with SCE&G in the $9 billion failed V.C. Summer project. He didn’t immediately respond to follow-up questions seeking more details about ICF’s services, including who specifically was contacted in the Legislature.
NextEra, a large Florida-based utility, has told lawmakers it wants to buy Santee Cooper, according to media reports. The Nerve last month reported, citing Santee Cooper records, that the utility’s total debt load as of last year, including interest, was more than $15 billion, to be paid back over 40 years.
ICF did not immediately respond to a phone message from The Nerve seeking comment. According to its website, ICF is a “global professional, technology and marketing services firm” with over 5,000 employees in 67 offices worldwide, noting “we are not your typical consultants,” and that since 1969, “public and private sector clients have worked with ICF to navigate change and shape the future.”
Comptroller general records show that the state departments of Commerce and Social Services have paid ICF Inc. a total of $232,402 and $138,139, respectively, since fiscal 2013. Commerce spokeswoman Adrienne Fairwell told The Nerve in an email Friday that ICF provides “program training, program manual updates and technical assistance” to the agency for the federal Community Development Block Grant program.
DSS did not immediately respond to a message from The Nerve seeking specifics on its ICF payments.
Besides ICF, the S.C. Senate also “engaged” the Washington, D.C.-area Bates White Economic Consulting and Stark Energy Consulting to “provide advice on the issues related to the V.C. Summer nuclear project,” Gossett said in an email to The Nerve, noting Stark Energy provided “legal advice in conjunction with the Bates White report.”
The Bates White firm in a March 22 report concluded that SCE&G could temporarily cut electric rates for its customers by 13 percent – $19 out of a typical monthly $147.53 residential bill for 1,000 kilowatt hours – “without significantly increasing the likelihood of insolvency.” The firm contended the rate cut “could be achieved entirely through a reduction in SCE&G’s dividend payment.”
The Senate has tentatively approved an amended resolution authorizing the temporary 13 percent reduction, but adjourned without taking a final vote and was on vacation last week. The House version would suspend the full V.C. Summer portion of electric bills –$27, or 18 percent, for typical residential customers – until the state Public Service Commission issues a final order on the matter by Dec. 21 of this year.
Gossett told The Nerve he expects an invoice from the Bates White firm “very soon.” Asked about the status of the work done for the Senate by Stark Energy Consulting, he replied, “The Senate has not yet received their report and has not paid any fees to date.”
Lawmakers’ role in project meltdown
The V.C. Summer fiasco, which resulted in the loss of more than 5,000 jobs when SCE&G and Santee Cooper abandoned the construction of two nuclear reactors at the Fairfield County site on July 31, has its roots in a 2007 state law, known as the Base Load Review Act, which the Legislature quietly passed.
That law allowed SCE&G to charge its ratepayers – with the approval of the Public Service Commission, which regulates private utilities – for the construction of the now-abandoned reactors before the project was completed. The S.C. Office of Regulatory Staff, which under state law is supposed to represent ratepayers’ interests, didn’t oppose any of the nine SCE&G rate hikes over the years that were approved by the PSC.
ORS signed off on later rate hikes even as its regulators knew of escalating construction costs and delays in projected completion dates. SCE&G customers collectively have paid about $2 billion toward the failed project.
Under a 2004 state law, a 10-member, legislatively controlled panel known as the “State Regulation of Public Utilities Review Committee,” or PURC for short, exerts considerable control over the regulation of utilities in South Carolina.
The committee, which includes six lawmakers, screens and nominates candidates to the seven-member PSC, and also is charged with annually evaluating committee members individually and as a group. It also screens and qualifies candidates for Santee Cooper’s 12-member board of directors. In addition, PURC essentially hires and oversees the ORS executive director.
The Nerve in February reported that PURC nearly a decade ago quietly issued a report advocating the spread of nuclear energy in South Carolina.
PURC’s six current legislative members were appointed to serve on special legislative committees investigating the collapse of the V.C. Summer project. To date, neither the House nor Senate panel has issued a report or written summary of its findings to the public.
Brundrett is the news editor of The Nerve, a website of the S.C. Policy Council. Contact him at 803-254-4411 or email@example.com. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.