Where there’s smoke, someone should investigate, don’t you think?
All hell is breaking loose at the Oklahoma Corporation Commission, and it’s time for the candidates who are showing up to join this fray to speak up and let us know where they stand.
The August 4 hearing at the OCC reminded me of a principal who smelled of smoke coming from the boys’ bathroom. When he calls through the door to investigate, the boys inside calmly reply that everything is fine, while frantically trying to open the window and blow out the smoke.
The question is, is it just cigarette smoke or did they inadvertently catch the trash can on fire?
Where there is smoke, responsible officials should investigate to ensure there is no catastrophic fire in progress. That’s what OCC Commissioner Bob Anthony was doing when he questioned representatives of Hilltop Securities and RBC Capital about the state of the $4 billion to $5 billion in taxpayer-backed bonds, in particularly those of OG&E which were issued in July.
Anthony obviously looked at the results of this bond sale – costing $330 million more than expected – and smelled smoke. The calm demeanors of the bond advisers and underwriters they interviewed were belied by the scattered, repetitive and evasive answers they gave.
To begin with, they attributed the increased costs to changes in the market between the expected March issue date for the bonds and the actual July issue date. But they only attributed $120 million of the $330 million to this delay and failed to account for the other two-thirds of the excess costs at all. They also repeatedly bragged that OG&E bonds were better priced than a similar PG&E issue without mentioning that the California utility had recently gone bankrupt due to wildfire liabilities and therefore a pretty puny choice at for comparison.
These boys also tried to blame the delay from March to July on citizens who (like me) submitted protests to the Supreme Court, arguing that the bonds weren’t just bad policy (because of all their unnecessary risk and expense), but were also unconstitutional. In its May ruling in the case, the Supreme Court sharply criticized Oklahoma Attorney General John O’Connor for failing to participate when he was legally required to represent taxpayers in such cases. The Court explicitly asked his office to rule on some of the legal issues we raised, and even offered the AG a month to submit a brief. But the AG refused to intervene, leaving the Court in turmoil and us protesting citizens pleading on behalf of all taxpayers, not just ourselves.
“The consumers of public services that the Attorney General should represent have effectively been left without representation. Their access to a lawyer is the responsibility of the Attorney General. Yet he let them down,” Judge Douglas Combs wrote.
The fact that the AG’s contribution to the broadcast delay completely escaped mention when the bond boys tried to pin the $120 million blame on the citizen protesters is just one more example of the rambling explanations. and sometimes incoherent coming from the boys’ room in a frenzy. efforts to convince Commissioner Anthony that there is nothing to see.
But this isn’t the first time Bob Anthony has been there, and he clearly wasn’t buying their act. Where there is smoke, there can be fire – especially when, as Bob exposed, the people and companies involved apparently had no fiduciary duty to do what was in the best interest of the taxpayers. . Therefore, at a cost of a few basis points that no one but Bob would notice, they could easily distribute slices of OG&E bonds at bargain prices to their friends on Wall Street in so-called “arm’s length” transactions. . As Commissioner Anthony pointed out, a few extra basis points (fractions of a percentage point) in mispricing could add up to $100 million or more in a deal this size – money that taxpayers will have to shell out for the next 28 years.
It’s time to find out where the candidates for the Corporation Commission stand. Do they support Commissioner Anthony and AARP’s call for an independent post-trade analysis of OG&E bonds to find out what really went wrong? Should the Auditor and State Inspector be brought in to determine how Hilltop Securities could be engaged by both the OCC to write the bond financing orders and also the Oklahoma Development Finance Authority to execute those orders? (Sounds like a pretty clear conflict of interest to me.) Or should everyone just look the other way, suck it up, and pay their inflated utility bills?
In my opinion, if those Wall Street boys set the toilet on fire, we need to find out as soon as possible. Bob Anthony for Fire Chief! But who is going to step in and show us that he deserves to be our next commissioner of society?
Dr. Mike Ritze is a former Oklahoma State Representative from Broken Arrow.