Charleston Post & Courier
September 3, 2017
All but one of the 32 lawmakers investigating the demise of the V.C. Summer nuclear project have taken campaign contributions from the utility responsible for building it, highlighting the extent of the power industry’s lobbying efforts in Columbia.
The overwhelming majority have received funds from SCANA Corp., parent company to S.C. Electric & Gas Co., its subsidiaries and political action committees within the last two years, according to a Post and Courier review of campaign finance records. They include 14 who took contributions this year as uncertainties surrounding the construction project mounted.
Those lawmakers, who sit on twin House and Senate committees formed last month, are now tasked with probing what went wrong with the project, which cost $9 billion before construction was halted in July. They’re also responsible for forming ideas on how to limit the financial fallout and create safeguards that prevent another energy failure like it.
The lone lawmaker who didn’t receive contributions was Republican Kevin Hardee of Loris, which is outside of SCE&G’s service territory.
SCANA doesn’t cut big checks — it typically gives individual legislators $500 to $1,000, the maximum for a single election cycle — but critics say the steady dribble of contributions helped build warm relationships under the Statehouse dome.
The Cayce-based utility has also given tens of thousands of dollars to legislative caucus groups, and it spends around $200,000 a year to lobby the General Assembly, with a crew of eight lobbyists to monitor legislation and advance its message.
“They make them because they’re basically trying to gain access,” said Frank Knapp, president and chief executive of the S.C. Small Business Chamber of Commerce, which has called for a ban on utility contributions. “They’re just not after good government. They’re looking for some return on their investment.”
Broad reach
The lawmakers who took donations from SCANA come from both sides of the political aisle and from all corners of the state. Some sit on standing committees that regulate utilities, but others are typically disconnected from the day-to-day policymaking that affects power companies.
Political observers say it’s little surprise that nearly all of them received funds from SCANA.
Utilities in the heavily regulated business of making and delivering electricity are among the biggest spenders in South Carolina politics, pouring hundreds of thousands of dollars a year into lobbying efforts.
Last year, for instance, power companies made up three of the top 10 lobbying spenders in Columbia, state records show.
Aside from SCANA, they included the Electric Cooperatives of South Carolina, a trade group representing 20 small power providers known as “co-ops” across the state that helped lobby for legislation that helped finance the reactors.
Another is Duke Energy, the state’s biggest energy provider. The Charlotte-based giant, which was once courted unsuccessfully as a partner in the V.C. Summer project, dropped a separate plan to build nuclear reactors in Cherokee County last month.
The extent of the industry’s spending has come under closer scrutiny, however, as the General Assembly begins to unpack the policies and processes that advanced the now-scuttled nuclear investment and what pushed it off track.
SCANA and its partner, state-owned power company Santee Cooper, canceled the project after lead contractor Westinghouse Electric filed for bankruptcy protection, wiping out its promises for a fixed cost after years of delays and cost overruns. The utilities said their analysis found that the two reactors being built in Fairfield County would cost at least $21 billion in all, nearly double initial estimates.
Lawmakers including House Speaker Jay Lucas have said the Legislature played a role in helping get the project off the ground.
Fearing the prospect of coming power shortages, legislators fast-tracked the Base Load Review Act in 2007, a law that broke tradition and allowed private utilities — SCE&G in this instance — to bill customers for power plants before they’re completed. The proposal was meant to save ratepayers money by cutting down on long-term financing costs. But it also put more of the risk of construction on customers rather than investors.
The V.C. Summer project was approved the next year. Lawmakers in both parties have said they trusted SCANA to manage the project and utility regulators to oversee the process.
State Rep. Russell Ott, a St. Matthews Democrat and vice chairman of the House panel investigating the project, says that trust owed to “the standing SCANA had built up, the stock that they had built within the General Assembly.”
It gained that status over time, Ott said, because SCANA is one of South Carolina’s largest public companies, it provides power to some 700,000 customers and it has a steady presence in the Statehouse. Campaign contributions, he says, helped build those relationships.
“It obviously helps with their presence and their access to folks in the General Assembly,” said Ott, who returned $2,000 to SCANA last month. “What took place back in 2007 was a level of trust that should not have been there.
Rep. Russell Ott, D-St. Matthews, speaks to the media and a crowd of laid-off construction workers days after two nuclear reactors were canceled in South Carolina. Ott is one of two lawmakers who have returned campaign contributions received from SCANA Corp., the lead investor in the failed project. File/Andrew Brown/Staff
Political strategy
Lucas says he chose the 20 members of the House committee based on their expertise in the complex utility industry and the areas they represent. He has said he aimed to include representatives whose districts are served by SCE&G, as well as Santee Cooper and the cooperatives it sells power to.
Caroline Delleney, a spokeswoman for the House speaker, said campaign contributions weren’t a factor in his decision.
“Speaker Lucas never considers campaign contributions for committee selections,” Delleney said in an email.
SCANA, for its part, considers similar factors when it decides how to spend the money its employees contribute to its political efforts. Spokeswoman Rhonda O’Banion said candidates’ geography and policy focus are key factors when the political action committee divvies up funds.
In an email, O’Banion said the employee PAC’s board also considers whether a candidate “demonstrates support for public policy issues that are important to our business, our employees, customers and communities.”
It also focuses on whether a candidate “serves in a leadership role or is a member of a committee with jurisdiction over matters that impact our business,” O’Banion said, or if they’re “an emerging public policy leader.”
Electric co-ops, which buy the majority of Santee Cooper’s power, follow a similar strategy. Co-ops and their trade group’s PAC routinely give to the officials representing their coverage area, including 28 of the 32 lawmakers on the Legislature’s special panels.
Mike Couick, chief executive of the Electric Cooperatives of South Carolina, said the political efforts are funded by contributions from about 1,800 employees. A committee of workers decides how much to give, typically steering a few hundred dollars a year toward sitting politicians who have backed the co-ops.
“Our general mantra is that we support incumbents that support us,” Couick said. “That’s been around for a long time.”
Calls for reform
The breadth of the utilities’ efforts in Columbia has raised the ire of the project’s critics, some of whom have called for a prohibition on campaign giving from power companies.
Tom Clements, a Columbia-based adviser to Friends of the Earth, said the legislative panels should return the contributions they’ve received from utilities and agree not to accept them in the future. He added that “a cloud’s going to hang over them as long as they’ve accepted money and not returned it.”
The idea of a ban on utilities’ contributions was first floated last month by the “Stop the Blank Check” coalition, a group of eight organizations that opposed the V.C. Summer project. The initiative includes the S.C. Small Business Chamber and the League of Women Voters, and it calls for a ban on gifts to PACs and legislative caucuses, which have higher contribution limits.
“The utilities should make their case to legislators without the warm goodwill that money can so easily generate,” the groups wrote in a platform outlining their goals.
Other states have limited regulated industries’ political activities, but for the most part, they prohibit donations to regulators, not all politicians. At least one state, New Jersey, has a blanket prohibition, and 22 have banned all corporate giving, according to the National Conference of State Legislatures.
Frank Knapp, president and chief executive of South Carolina Small Business Chamber of Commerce, has called for a ban on campaign contributions from regulated utilities. File/Grace Beahm/Staff
With the Legislature out of session and its special committees only beginning their work, it’s not yet clear whether those calls will gain traction.
Two members of the special panels, including Ott, have unloaded contributions from SCANA. The other, freshman Rep. Micah Caskey, R-West Columbia, donated the funds to a Midlands charity, saying they “might undermine my neighbors’ confidence in the integrity of my part in the investigation into this debacle.”
Separately, Gov. Henry McMaster said last week that he didn’t plan to return money he’d received from SCANA or its employees when the utility held a June fundraiser supporting his 2018 gubernatorial run, where he raised some $250,000.
Campaign finance records show that the governor received contributions from some of the utility’s top executives, including CEO Kevin Marsh, who gave $2,500. Chief Financial Officer Jimmy Addison and chief nuclear officer Steve Byrne each gave $2,000. The three have been called to testify before the Legislature.