NC WARN has filed an ethics complaint against Sen. Dan Blue, D-Wake, contending there is a conflict of interest between his sponsorship of legislation about utility regulation and his law firm’s work for the Atlantic Coast Pipeline.
The complaint, filed Wednesday morning with the N.C. Ethics Commission, raises questions about Blue’s work on behalf of Senate Bill 559 and the work that his law firm, Blue LLP, is doing on 32 condemnation cases in North Carolina for the pipeline.
The legislation, which passed the state Senate last week, is strongly supported by Duke Energy Corp. Among other things, the bill would allow the N.C. Utilities Commission to approve multiyear rate plans for utilities to pay the costs of long-term projects, specifically approved by the commission in a rate case, that could qualify for annual rate increases for three to five years — without additional rate cases.
The pipeline is a partnership of Charlotte-based Duke (NYSE: DUK), which owns 47% of the $7.8 billion project, Dominion Energy Inc. (NYSE: D), which owns 48% and Southern Co. (NYSE: SO).
“It appears Senator Blue is using his legislative position for the benefit of clients in his private law firm practice,” the complaint says.
Blue's response
It alleges that SB 559 would “significantly alter the system by which monopoly electric utilities recover capital investments, operating expenses and profits from ratepayers.” And it says that this would benefit Duke and Dominion, which between them produce about 90% of the electricity in the state. Duke alone accounts for close to 80% of North Carolina’s electricity.
Blue denies any conflict and says in a response on Twitter, “anyone claiming that I can be bought doesn’t know my record.”
“Connecting Senate Bill 559 to the Atlantic Coast Pipeline is a pretty big stretch,” he says in a formal statement. “Connecting my public office to a quid pro quo is an even bigger stretch.”
Work on the condemnation cases has, in fact, been suspended because the entire 600-mile pipeline project is being held up by a recent ruling of the 4th U.S. Circuit Court of Appeals. Dominion CEO Tom Farrell said recently that the ACP partners are prepared to take the case to the Supreme Court if necessary.
Although NC WARN asserts that the pipeline can be “impacted by the bill because provisions of it could shield Duke and Dominion from full risk if the troubled pipeline project collapses after heavy investments by the corporations,” it is not clear how that could be possible. SB 559 relates only to state-regulated utilities in North Carolina. The pipeline is not part of the regulated businesses for either Duke or Dominion. It is part of the commercial business for each company, and there are strict guidelines separating financial issues between regulated utilities and any commercial operations by their parent companies.
'Clear-cut issue'
Warren contends that SB 559 is so broad and vague that it raises concerns that it could be used to cover losses if the pipeline fails, but he concedes that NC WARN cannot say how that would occur.
But he contends the primary point of the complaint is the assertion that Blue has a conflict of interest. And if construction on the pipeline — and the condemnation cases — resume, Blue’s firm has the potential to make significantly more money from actions involving the pipeline.
“The ethics issue is clear-cut: Sen. Blue can’t serve the public interest when he’s heavily paid to serve the diverging interests of Duke Energy,” says Jim Warren, executive director of NC WARN. “The legal fees – and the promise of much more – make Senator Blue an advocate for the ACP, Duke Energy and Dominion.”
Blue says in his statement that the legislation “isn’t about the ACP project.” He says it simply “gives further regulatory options to the state Utility Commission.”
NC WARN is a justice and environmental advocacy group based in Durham.