OKLAHOMA CITY — The three elected members of the Oklahoma Corporation Commission, which regulates utilities and numerous other industries, have taken hundreds of thousands of dollars in campaign contributions from those they’re tasked with regulating during their most recent election cycle, a CNHI Oklahoma investigation has found.
The finding comes at a time when the Commission is evaluating a new charge to bills that could saddle Oklahoma consumers with increased costs for decades to come.
Although the donations are legal, critics — including the national watchdog group Common Cause and a recognized government ethicist — say the current regulatory set-up favors those with money, attorneys and resources, while a less-than-transparent regulatory process limits public access.
The months-long investigation by CNHI Oklahoma found:
— The three elected commissioners have each accepted more than $200,000 from employees, subsidiaries or political action companies tied to companies they regulate, or from individuals with a vested interest in those industries during their most recent election cycle.
— One commissioner, Todd Hiett, has refused to resign from his role on a bank board despite the fact that the bank has interests that intersect directly with his regulatory duties. He has recused himself from voting on those issues, but former Republican legislative colleague Mike Reynolds doesn’t think that’s enough.
— A revolving door exists between the Commission and industry, as at least half a dozen senior employees for the agency have gone on to work for the utility companies that are regulated, Commissioner Bob Anthony says.
— Oklahoma’s newly-appointed attorney general, John O’Connor, who represents consumers in matters before the Commission, has accepted more than $50,000 in campaign contributions since July from companies regulated by the Commission.
— State utility regulators and the Attorney General’s Office refuse to say which companies profited from last February’s unprecedented spike in natural gas prices.
Public utilities reported they were forced to buy natural gas at as much as $1,200 MMBtu (a unit of measuring natural gas equivalent to a million British Thermal Units) when it had been selling for about $2 to $3 just ahead of the two-week cold snap.
The weather event generated nearly $4.5 billion in unexpected utility expenses. Commissioners must decide who gets to pay — ratepayers or shareholders, and if ratepayers, which ones. Commissioners also must decide if utility companies acted prudently when they bought gas in the period leading up and during the storm.
The cost of just one case illustrates the impact on consumers. Commissioners recently voted to increase the average Oklahoma Gas & Electric Company customer’s total bill by over $700, ordering consumers to pay an additional $2.12 a month on average for the next 28 years to cover the $748.9 million in fuel costs generated by that utility during the winter storm. Similar cases involving other utilities are still pending.
CNHI Oklahoma filed an open records request to find out which companies profited by raising natural gas prices in February, when utilities turned to rolling blackouts. OCC officials said those records had been sealed to the public and media, and did not provide any specific details responsive to the request. CNHI has appealed the denial.
Only a handful of parties that legally intervened in the rate case, including Walmart, the Oklahoma Industrial Energy Consumers, public utility shareholders, the AARP and the Attorney General’s Office have been granted access.
The few parties that have been permitted to intervene are also barred from publicly discussing certain aspects of the case, according to protective orders issued by commissioners.
Richard Briffault, a Columbia University government ethics professor, said there’s a longstanding, widespread problem with regulators taking campaign contributions from those being regulated.
He said while it would make sense to bar regulators from taking such contributions — or to impose a low cap on the amount they accept — only a few states do. State ethics officials have not responded to questions about whether they’ve tried in the past to cap or bar donations.
“Donations that are intended to make the commissioner generally grateful or favorably disposed to the industry — or even just unwilling to risk the loss of future campaign support — are generally treated as acceptable if disclosed and under any dollar limit that might exist,” Briffault said.
‘Like a Christmas tree’
Oklahoma is one of 11 states with direct election of commissioners. In most states, the governor appoints commissioners, according to an analysis by the National Conference of State Legislatures.
While other states like Texas have divided up regulatory responsibilities among agencies, Oklahoma lawmakers have continued to expand the Commission’s role in recent years.
“We’re like a Christmas tree,” said Commissioner Bob Anthony. “They just keep putting ornaments on us. We do not need anything else.”
He said many people describe the Commission as Oklahoma’s most economically powerful agency because it financially impacts almost all businesses and citizens or households.
The agency regulates more than 500,000 active and inactive oil and gas wells, every gasoline pump in the state, towing companies, passenger carriers, moving companies, railroads, pipeline safety, telecommunications and the trucking industry, as well as investor-owned gas, water and electric utilities.
Observers say that in a state where public utilities are essentially state-sanctioned monopolies, the Commission is supposed to stand in for that competition, determining whether utility actions were also responsible business decisions.
Anthony, who has served as a commissioner for 33 years, said the broad authority gives candidates enormous power when fundraising. He said his signature appears on between 10,000 to 15,000 orders or legal documents annually.
Nothing in state law prevents commissioners from accepting campaign contributions from those they regulate, although they can only accept donations 120 days before the primary election and up to 120 days after the general election. Finance records show each of the three commissioners has accepted money from those with ties to oil and gas, investor-owned utilities, railroads, trucking companies, convenience stores and banks as well as attorneys.
Commissioner Todd Hiett accepted the biggest donation among the three current commissioners — $10,000 from the Oklahoma Petroleum Alliance political action committee, which represents 1,300 members.
Cody Bannister, a spokesman for the PAC, said many members give in order to support elected officials who understand the importance of the oil and natural gas industry.
“We support elected officials who we believe can best create a business environment that attracts investment in the oil and gas industry whether that’s upstream, midstream or downstream, and legislation and regulation play an important role in attracting investment to Oklahoma no matter the industry, but definitely in the oil and natural gas industry,” he said.
Those with ties to investor-owned electric and natural gas utilities have also been big cumulative donors during the 2016, 2018 and 2020 election cycles. Employees and PACs with ties to Oklahoma Gas & Electric (OG&E), Public Service Company of Oklahoma (PSO) and Oklahoma Natural Gas (ONG) have donated nearly $65,000 combined, campaign records show.
A spokeswoman for OG&E said the company encourages employees and stakeholders to take an active interest in promoting good government, and because energy regulation and other public policy decisions substantially impact the company and its customers, the utility ensures its interests are fairly considered.
PSO said employees are not required to make contributions, and there is no reimbursement for any political contributions made.
ONG did not return a message left seeking comment.
Commissioners Hiett and Dana Murphy also didn’t respond to requests for an interview about the possible conflict of interest posed by taking money from companies they regulate.
Attorney General O’Connor also refused to comment. His office has a unit that is tasked with representing consumers in electric, natural gas, drinking water and telecommunications matters during Commission proceedings.
Campaign finance reports indicate O’Connor had accepted more than $57,000 from people with ties to the industries regulated by the Commission since he was appointed in July.
For example, O’Connor reported accepting a single donation of more than $6,000 from an attorney whose practice specializes in oil and gas litigation; a total of $8,800 from two attorneys whose firm practices energy and natural resource litigation; more than $3,400 from attorneys with a law firm that has ties to a recent utility case; and thousands more from the oil and gas industry.
“The rubber stamping so quickly has me worried that this world is just too cozy between regulators and the companies they’re supposed to be watching,” said Steven Goldman, a member of VOICE, a coalition of groups that have come together to advocate for Oklahoma City-area residents. He became interested in the Commission after members of his Oklahoma City congregation started expressing concerns about increasing utility rates.
Goldman said he believes the Commission is more invested in protecting businesses over consumers and in limiting public access.
He’s been pressing for transparency regarding February’s two-week winter storm, which sent temperatures plunging below 20 degrees for almost a week straight.
Goldman also said he’s been unable to get an answer from O’Connor about whether he’s planning to pursue price-gouging cases on behalf of consumers as the state approaches a February deadline to act.
He said roofing contractors face litigation from the Attorney General’s Office if they raise prices more than 10% after a natural disaster, but companies that increased natural gas costs by 1,000% have yet to face any consequences.
“As a legislator, I learned that campaign contributions seem to have a big influence on votes, and the position of various people,” said former Republican state Rep. Mike Reynolds. “So does that mean it buys someone’s vote? No. What it can mean is it buys their exclusive influence to discuss the issues.”
Reynolds is a vocal critic of Commissioner Hiett, who also serves on the board of directors of SpiritBank. The bank has financial interests in operations regulated by the Commission, and Hiett’s inability to participate in Commission matters risks throwing entire cases into limbo, Reynolds said.
Reynolds sued to have Hiett removed from the Commission, arguing there have been times when a company doing business with SpiritBank came before the Commission. Hiett recused himself, but Reynolds argues that the appropriate thing for Hiett to do is resign from the bank board or the Commission.
According to Reynolds’ lawsuit, SpiritBank guaranteed a surety — essentially co-signing on any debt — for at least one oil and gas producer. In 2019, the Commission’s oil and gas conservation division filed a case against the producer and SpiritBank, seeking the bond be forfeited and that the money be used to plug wells and remove trash and equipment from an oil site. In 2020, the Commission found that the oil and gas company had violated the rules and assessed a fine against the company. Hiett abstained from the decision, according to the lawsuit.
Reynolds’ lawsuit was dismissed, citing his lack of standing to file it, but Reynolds maintains that Hiett’s actions are contributing to a breakdown of trust between commissioners and the public.
Hiett refused to comment.
But in July court filings, Hiett’s attorneys argued that he has served on the bank board prior to his 2014 election to the Commission and has continued to do so. They also argued that when a Commission proceeding was initiated involving the bank, Hiett recused himself. He also recuses himself from other SpiritBank votes that could impact regulated matters.
The attorneys argued that Hiett can serve because while the state Constitution specifically prohibits commissioners from engaging “in almost a score of activities,” it does not specifically bar a commissioner from serving on the board of a bank.
Hiett’s attorneys also argued that previous Oklahoma Supreme Court rulings have determined that it could be acceptable for commissioners to have ownership in an oil and gas company.
Hiett and Anthony get paid $114,713.04 to serve as commissioners while Murphy makes $116,713.08, according to state salary records.
Commissioner Anthony said Oklahomans can have confidence in their independence as a result of their actions. Anthony said he introduced the first ethics policy at the agency more than 25 years ago in response to the bribery and corruption issues that existed at the time, and he’s since strengthened rules to protect consumers. He argues his efforts have saved consumers money.
“It’s a constant challenge to maintain openness and serve the public with honesty and integrity, and it’s one that I believe in very strongly,” Anthony said. “When my three years is up, you just watch and see, you won’t find much regulated companies that ask me to be on their board of directors.”
He also said he had to loan himself several hundred thousand dollars to pay for his final campaign.
But Anthony said he has one concern — the revolving door between regulators and industry. He said at least a half dozen OCC senior staff members have taken jobs with Oklahoma’s largest public utility companies, trading in a state government salary for a nice pension and larger private paycheck.
“I think that’s a whole lot more of an issue, personally, than whether somebody that worked for one of the public utilities made a campaign contribution during the legal period,” he said.
‘Optics are horrible’
Beth Rotman, the director of money in politics and ethics at Common Cause, said the “optics are horrible,” referring to a law that allows officials to apply for and accept jobs while they’re actively supposed to be protecting consumers.
Rotman said accepting state-level jobs is often how people get their expertise, but Oklahoma lawmakers need to implement a waiting period before a regulator can flip from the public to private sector.
“What’s the best way to get that job?” she asked. “Oh, I’m going to start giving you what you want while I’m a regulator. You could just imagine what the bad actor could do in that position.”
Rotman also said Oklahoma law should prohibit a commissioner from also serving on a bank board, and she’s uncertain why lawmakers allow it, and why a commissioner would insist on doing it. In the short term, she said it is a bad practice that undermines credibility in the Commission.
“It’s an appearance issue,” Rotman said. “So it just doesn’t look good. So let’s avoid that.”
Deborah Thompson, an attorney with OK Energy Firm, who has about 25 years experience, said it’s costly and requires an attorney to intervene in a case before the Oklahoma Corporation Commission. The process, she said, favors utility companies that can afford to hire a dozen expert witnesses along with liaisons tasked with communicating directly with utility regulators and entire departments of attorneys.
It’s good business sense for utilities, but “it just makes it a big uphill battle for anybody else,” said Thompson, who was recently representing the AARP in public utility rate cases and the ongoing $4.5 billion case stemming from the spike in those February natural gas costs.
She said sometimes it’s a David-versus-Goliath battle.
“We are one tiny cog up against pretty big entities with a lot of resources, so it’s a difficult battle,” Thompson said.
The AARP has finite resources to spend, but focuses on fighting settlements or decisions that it doesn’t believe are in the interest of its members. The AARP opposed a settlement agreement entered into by a small number of participants, including a group of industrial consumers, that changed the allocation formula on OG&E’s recent case and shifted more than $20 million more in costs from industrial to residential customers, Thompson said.
A woman who answered the phone at the Oklahoma Industrial Energy Consumers said someone would call CNHI Oklahoma back, but no one ever did. Campaign finance records show its executive director has donated more than $3,500 to commissioners’ campaigns.
Chad Mullen, with the AARP, said it’s not hyperbole to say that Oklahomans are looking at some of the largest transfer costs to consumers in state history following the February storm. Consumers could be paying the increased costs for more than two decades.
He said he wants to know why shareholders shouldn’t bear the costs instead of ratepayers.
“I’m still curious exactly who made all this money, why we weren’t able to invoke price-gouging laws like we would on maybe other things in this same situation,” Mullen said.
He believes commissioners in the past have done a good job looking out for consumers, and hopes they’ll advocate for the people who put them in office.
“Our elected corporation commissioners ultimately are accountable to the voters, and I’m going to stay optimistic that they will listen to the people that put them in office and do the right thing,” said Mullen.
He said he donated $100 to Hiett’s most recent campaign because the two have known each other for a long time, and he said Hiett has looked out for the ratepayer in cases before the Commission.
‘Sway the vote’
When Republican Harold Spradling ran for corporation commissioner in 2018, he spent $96 against well-financed Anthony. He still managed to garner more than 60,000 votes against Anthony and more than 90,000 when he ran against Hiett in 2020.
He said he could have raised funds in 2018 and 2020, but was reluctant because he wanted to make sure he could vote without having to worry about the impact of the donations or any expectations that might be attached. Also, he said the typical donors would be reluctant to support an 88-year-old.
“We’re (talking) about a lot of money, but they’re not going to put their money behind an 88-year-old man such as me,” he said. “They’ll put it behind someone who’s willing and able in other ways, expected to serve six years and then another term, so that means I don’t see a realistic way for me to run for Corporation Commission again.”
But with Commissioner Dana Murphy terming out in 2022, Spradling said he’s certain the oil companies and utilities will throw their money behind someone else.
He said donors are giving money to “sway the vote.”
“Why wouldn’t they give $1 million to save $100 million?” he asked.