Another legislative study, another likely six-figure taxpayer bill at the end.
Last week, the “Electricity Market Reform Measures Study Committee,” which was created by state law in 2020, met virtually for the first time with a team of hired consultants with the Boston-based Brattle Group.
Under its contract with the eight-member committee, co-chaired by Sen. Tom Davis, R-Beaufort, and Rep. Murrell Smith, R-Sumter, Brattle will receive a maximum $750,000 for “labor and non-labor fees and expenses,” with the possibility of being paid more if authorized by the committee.
Hourly consulting fees range from $250 for a research analyst to $625 for a principal in the firm, according to the contract, provided last week to The Nerve by Senate clerk Jeff Gossett under the state Freedom of Information Act.
The Legislature for this fiscal year, which ends June 30, designated $750,000 in state surplus dollars for the committee through the S.C. Office of Regulatory Staff (ORS). In an email response last week to The Nerve, Gossett said no payments have been made to date to Brattle, adding the firm is the “only consultant engaged by the study committee.”
The Brattle Group, which has 500 employees in 11 U.S. and foreign offices, “answers complex economic, regulatory, and financial questions for corporations, law firms, and governments around the world,” according to its website.
The law creating the study committee required the panel to “retain a third-party, independent expert consultant or consultants to advise the study committee and issue its own opinion as to what market reform measures studied, if any, benefit South Carolina consumers.”
Davis, who is the Senate Labor, Commerce and Industry Committee chairman, and Smith, who is the House Ways and Means Committee chairman, were authorized by law to select the consultant. They signed the contract with Brattle on Feb. 1; the law allowed them to bypass the state procurement code in hiring the firm.
Under the law, Rep. Bill Sandifer, R-Oconee, the House Labor, Commerce and Industry Committee chairman who was the legislation’s main sponsor, and Sen. Luke Rankin, R-Horry, whose chairs the Senate Judiciary Committee, were authorized to select the four House and four Senate members, respectively, of the committee.
At its March 9 inaugural meeting, Davis said the committee’s formation was a “consequence of what happened up in Fairfield County,” referring to the 2017 collapse of the $9 billion V.C. Summer nuclear construction project, a joint endeavor of state-owned utility Santee Cooper and South Carolina Electric & Gas, now part of Virginia-based Dominion Energy.
The Nerve in 2019 revealed that the taxpayer tab for Virginia-based ICF, a global consulting firm hired to help another legislatively controlled study committee on the possible sale of Santee Cooper – which ultimately didn’t happen – had grown to more than $735,000. Gossett at the time said the Senate and House were splitting the consulting costs incurred by the nine-member “Public Service Authority Evaluation and Recommendation Committee.”
Davis during last week’s meeting said the V.C. Summer debacle “caused the General Assembly to sort of step back and take a look at how we went about generating, distributing and transmitting power in South Carolina.” He said the state historically has used a “vertically integrated, geographic monopoly model,” adding it was his understanding there are other systems that could “introduce more competition, more choices or dynamics in the production market.”
“We’ll go wherever the data leads us in terms of what model will yield those results,” Davis said.
Generally, under a “vertically integrated” model of electricity distribution, a single company owns the power plants, transmission and distribution lines, and delivers electricity to the end customer, according to an energy market blog by Seattle-based LevelTen Energy Inc. At last week’s meeting, a Brattle consultant said that model exists in most of the Southeast.
Under the law creating the study committee, the panel could recommend that vertically integrated utilities in the state “divest their generation or transmission assets, or both.” The law requires that the committee be advised by a board whose members include the South Carolina presidents of Dominion Energy and Duke Energy and the Santee Cooper CEO, or their designees, as well as other representatives from the business, energy and environmental fields.
The Brattle Group estimates it will take five to eight months to complete its work for the study committee, according to a timeline presented at the meeting.
The law creating the committee, effective Sept. 9, 2020, required it to issue a report by last Nov. 1 to the Legislature that “may include recommendations that the State take action or not take action on any of the market reform measures studied.” Under a budget proviso for this fiscal year, the committee must issue an initial report on its work “no later” than June 30 and allows the panel to produce additional reports past the deadline.