Gov. Mike Easley’s controversial appointment to the state Utilities Commission raises questions about the objectivity of a group charged with regulating energy, telecommunications and water companies.
The day before the legislative session began, Jan. 23, Easley appointed attorney Ed Finley, a partner in legal heavyweights Hunton & Williams, a Raleigh firm whose clients include utility companies. Awaiting confirmation by the legislature, Finley took his seat as an interim commissioner Feb. 5, just three weeks before one of the commission’s most controversial decisions: approval of Duke Energy Carolinas’ Cliffside coal-fired power plants. (See this week’s Follow-Up.) However, he did not participate in the decision.
The seven-member commission includes two attorneys whose previous firms have utilities clients and two former legislators who received thousands of dollars from energy and telecommunications companies while in the General Assembly.
Commissioners can’t hold other jobs during their term, and draw an annual $115,000 salary.
Finley declined to comment, saying through his assistant that he wants “to lie low” until after the confirmation.
However, the day of Finley’s appointment, State Ethics Commission Executive Director Perry Newson sent a letter to Easley stating that while Finley had no actual conflict of interest, there was “the potential” for one on two fronts: his legal practice and his personal stock portfolio. Newson recommended that Finley recuse himself from matters involving former clients or utilities in which he held a personal financial stake.
Within a month of Newson’s letter, Finley and his wife sold their stocks in Duke, Progress Energy and Dominion Resources, which he valued at more than $10,000 on his financial disclosure statement. The statements, which are mandatory for most public officials, don’t require filers to disclose specific amounts over that threshold.
It can be argued that knowledge of the utilities’ industries is important for commissioners, but critics note that the commission has no environmentalist with equal credentials. Pete MacDowell of N.C. Waste Awareness and Reduction Network (N.C. WARN) plans to oppose Finley’s confirmation at the legislature.
“I hope we have an open and fully deliberative process rather than the usual perfunctory confirmation,” MacDowell says. “We couldn’t have a more biased appointment if they recruited directly from the utilities.”
Easley’s office did not return calls for comment.
Rep. Drew Saunders, chairman of the House Public Utilities Committee, co-sponsored a joint resolution to confirm Finley. Saunders said the committee will likely discuss the confirmation and any potential conflicts of interest at a March 7 meeting.
Rep. Pricey Harrison, who serves on the public utilities committee, said she likely would support Finley’s confirmation.
“When I was elected, business and industry wrote me off because they thought I couldn’t be objective, so from my perspective I’d like to give him the benefit of the doubt,” Harrison says.
Commissioners roundly deny that their previous work histories with utilities influence their rulings. “It’s not anything that crosses my mind,” says Commissioner Bill Culpepper, whom Easley appointed in January 2006, less than a year after he left the legislature. As a House member, he received $14,000 in contributions from Duke Energy and $11,000 from Progress, according to campaign finance records.
“I took an oath of office and I take that seriously,” Culpepper adds. “The utilities commission functions like a court, and its decisions are made on evidence and the laws applicable.”
However, it is difficult to verify the commission’s objectivity because its deliberations are closed, as was the discussion about whether to delay the Cliffside decision.
The utilities commission’s public staff, charged with representing ratepayers, also employs at least eight people who have worked for utility companies, according to documents filed with public testimony before the commission. Thomas Farmer Jr. worked in financial planning at Carolina Power & Light for 16 years. Howard Lowdermilk, who reviews electric utility rates and practices, worked for Carolina Power & Light and its successor, Progress Energy, for 25 years. Public Staff Executive Director Robert Gruber said Lowdermilk isn’t working on the Cliffside case.
The staff has recommended that the utilities commission approve Cliffside to meet future energy demands.
Gruber bristled at insinuation that the public staff could be biased, adding several staff members have experience in renewables and energy efficiency, including former GTE-South engineer James McLawhorn and Kennie Ellis, who worked in the mechanical department for the Daniel International Corporation at Shearon Harris Nuclear Power Plant.
“When Progress downsized, they had a lot of experienced people,” Gruber says. “We were lucky to get them.”
Four of the seven members of the N.C. Utilities Commission have previous ties to utilities, either at law firms working on their behalf or at the legislature where they received campaign contributions from these companies’ political action committees or their lobbyists.
Here the former positions of all seven members; commissioners are prohibited from holding other jobs during their eight-year terms.
Sam J. Ervin IV, lawyer and lobbyist for the Carolina Utility Customers Association, industrial ratepayer group
Bill Culpepper, state representative, 1993-2005. As a lawmaker, Culpepper received at least $71,000 from energy and telecom interests, including $14,000 from Duke Energy and $11,500 from Progress Energy.
Howard Lee, state senator, 1990-2003. During his 13-year tenure, Lee received at least $49,000 in contributions from energy and telecom companies, including $8,900 from Duke Energy and $9,100 from Progress and its future acquisition, Carolina Power & Light.
Ed Finley, partner in Hunton & Williams, which represented Progress Energy in its $7 billion acquisition of Florida Progress. Until recedntly, Finley owned more than $10,000 in shares of Duke Energy and Progress.
James Kerr II, partner in Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan. The firm lists Progress Energy among its clients.
Bobby Owens Jr., business owner
Lorinzo Little Joyner, attorney, utilities section of the N.C. Attorney General’s office and the public staff of the utilities commission