Lee Zurik Investigation: Are utilities the real power behind the PSC?

Updated: Nov. 15, 2013 at 3:15 AM CST
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Everybody who pays a utility bill in Louisiana is impacted by the decisions of the state's Public Service Commission. It's a government body that has broad powers to watch over and regulate public utilities and motor carriers, too. As part of our campaign finance probe, we ask, who funds the watchmen?

It turns out, the utilities and carriers themselves play a huge role in getting the commissioners elected.

A fundraiser hosted by a Bossier City businessman provides a case in point.

Jerry Juneau and his wife donated a total of $10,000 to Public Service Commissioner Eric Skrmetta's campaign. But Skrmetta's colleague on the commission, Foster Campbell says Skrmetta crossed the line when he allowed Juneau to host a fundraiser at his business, City Tele Coin - a company that operates prison telephones.

At the same time Skrmetta took Juneau's money, and used his office to raise even more campaign funds, City Tele Coin had started settlement negotiations with PSC staff for violating a ban on fees added to customer bills without the commission's approval. Based on a staff recommendation, the PSC will vote on the settlement early next year.

"They've broken our rules and they've been charged, and they're before the lawyers at the Public Service Commission for some heavy fines, I hope, for some of the things they've done," says Campbell. "To have [Skrmetta] up to Bossier City, to have him up in his office... they didn't have it at a hotel or a house; they had it at their office. And they invited people to come in and give him money. And he's going to have a final say whether or not they're fined? It's a terrible conflict."

Skrmetta disputes that. "It's not a conflict because, first off, the staff is negotiating the settlement. I'm not negotiating the settlement; I'm not bringing any influence to bear on the staff. I'm waiting for them to deliver unto us what they want to do. And it's my position right now, whatever the staff delivers to me, I'm fine with."

In fact, Skrmetta says, it's Campbell who has the conflict. He says Juneau didn't give Campbell money for the 2007 gubernatorial election. And since then, Skrmetta says, Campbell has used his office to punish Juneau.

"They are not giving me money, they're not contributing to my campaign because they are trying to affect my vote," insists Skrmetta. "They're contributing to my campaign because I want a fair hearing, when they know they have a commissioner on the commission who is doing everything he can to exact personal revenge because of 2007, that they decided to support Bobby Jindal."

FOX 8 News and NOLA.com/The Times-Picayune have spent the past three months looking at campaign contributions to the PSC. The commission regulates several utilities and services, including electricity, gas, telephones and tow trucks.

We found that, in the past four years, out of the $1.5 million raised by commissioners, at least $1 million - about two-thirds - came from the regulated industries and interested parties, such as attorneys, lobbyists and consultants.

PSC Industry Contribs

"The utilities have a vastly disproportionate influence over the selection of commissioners who are there, presumably, to protect the public interest," says Forest Bradley–Wright, the utility policy director at the non-profit Alliance for Affordable Energy.

The New Orleans-area commissioners, Skrmetta and Lambert Boissiere, had the highest percentage of contributions from the industry and interested parties. Commissioner Clyde Holloway had the lowest.

Boissiere declined to speak with us on camera about our findings, but said he may do an interview with us later.

Boissiere and Skrmetta have received a large portion of their money from Entergy - Skrmetta $41,000, Boissiere $36,000.

"The utility companies recognize that the money they give to a candidate or to a sitting commissioner is an investment," says Wright. "These are very savvy business entities that are not charitable operations. They recognize that the dollars they spend need to be delivering results. And at the level that they make these contributions, one has to draw a clear line that they are doing so because they see a return on that investment."

Wright says he'd like to see commissioners banned from taking contributions from companies they regulate. He says there's a reason they're donating money.

"There is no doubt, just like at the casino, that if they're laying those bets, they expect to win," says Wright, "and that the cost is borne by customers, it is borne by families, it is borne by businesses."

Boissiere's calendar shows he sometimes hosts fundraisers geared to an industry, including a Dec. 20, 2011 fundraiser at the Windsor Court for telecommunications companies. His campaign finance reports show telecommunications donated money a few days later.

John Schwegmann says he believes campaign contributions are influencing the commissioners. Schwegmann spent 16 years on the Public Service Commission, and he says he never took a contribution from a company he regulated.

"Those that accept all this money will say, 'Oh, it doesn't influence me…' It can't help but influence people," Schwegmann tells us. "These companies are attempting to buy influence."

Current Commissioner Skrmetta says he thinks that happened to him when a company tried to buy his influence about a year ago.

"I've actually had situations arise with other industries, that I have had to sit back and I have had to analyze the fact that I perceived that I was being asked to vote a certain way, and to do it for a fundraiser," Skrmetta tells us. "I chose to tell them, thank you very much, I'm not going to do it and I'm going to vote the way my conscience has."

Skrmetta won't tell us the company, and he says he doesn't know whether other commissioners were similarly approached.

The industries' influence through campaign contributions raises many questions, not the least of which is who these commissioners are looking out for - the power and phone companies giving them money or consumers paying those utility bills.

"I'm not saying it looks good," says Campbell. "It puts a doubt on things. But I do not know of anyone that's ever voted for something after taking some money with the understanding they'd take the money to vote for it. That's illegal; put you in the penitentiary for that."

The New Orleans City Council regulates Entergy New Orleans. Council members don't take contributions from the company or employees.

Only 11 states have public utility boards whose members are directly elected by voters. We found one, in Alabama, that forbids commissioners from taking contributions from utilities.

When we ask Skrmetta why Louisiana doesn't have a similar limitation on the books, he says, "If corruption is going to take place, you cannot stop it."

Interest in PSC races is usually low, so raising money from other sources could prove to be difficult.

Campbell tells us, "In a perfect world, it would be better for us not to take a dime from the companies we regulate. I think that would be best. Would it be hard? Yes. Is it possible? Yes."

But that fundraiser in Bossier City raises questions about what's influencing commissioners' decisions, and what's best for the ratepayers.

“If the very entity that is supposed to be protecting the public interest is in fact populated by people who have gotten their jobs from the financial contributions of the very utilities that they’re supposed to oversee, it inherently raises doubt,” Wright says. “It’s an inherent conflict of interest.”