COLUMBIA--Democratic lawmakers criticized Gov. Mark Sanford on Tuesday, accusing him of secretly trying to lay the groundwork for a sale of Santee Cooper.

"We expect our governor to act in an honest and aboveboard manner," state Democratic Party Chairman Joe Erwin said at a news conference.

Erwin's remarks were spurred by disclosures last week that Sanford expressed interest in selling the Moncks Corner-based utility in late 2003 and hired an investment bank last fall to look into the practicality of privatization.

Erwin said Tuesday that selling the state-owned utility would hurt South Carolina residents who are Santee Cooper customers. About 40 percent of the state's residents use Santee Cooper power. The utility's rates are about 30 percent less than those of investor-owned utilities such as SCE&G.

"This is a serious issue that will affect thousands of lives," Erwin said. "The fact that this was learned about through The Charleston Post and Courier and a (Freedom of Information) request is particularly troubling."

Sanford attended the press conference and was handed a Freedom of Information request from Erwin. "It's convenient you are here," Erwin said to the governor.

Afterward, Sanford denied having a "secret plan" to sell Santee Cooper, a New Deal-era utility that for years has provided cheap electricity to some of South Carolina's poorest, rural areas. Rather, Sanford said he commissioned the bank's examination as part of his campaign to get the utility to give more back to state coffers and to taxpayers who don't benefit from its relatively cheap rates. Santee Cooper is exempt from state property taxes, but 1 percent of its revenues go to the state's General Fund.

"We haven't talked about privatizing Santee Cooper," Sanford told a group of reporters. "People are trying to create fear in people to gain political gain. We've been very, very consistent in asking every (public) board out there to look under the hood."

The governor has pursued efforts to sell the state's fleet of cars and surplus property, including property at Port Royal, as well as privatizing a state-owned golf course and a bait-and-tackle operation in state parks.

Selling Santee Cooper would require the Legislature's consent.

Despite Sanford's denials regarding Santee Cooper, additional documents obtained this week under the Freedom of Information Act show that Sanford's office requested proposals in September to "examine the feasibility of privatizing" Santee Cooper.

According to those documents, Marshall Evans, a policy adviser in Sanford's office, contacted at least four investment banks in the fall, asking them to submit bids for a confidential study on the sale of Santee Cooper.

Evans asked the banks to propose a start-to-finish strategy for selling the state-owned utility, including approaches to "mitigate or manage" the impacts of a sale on power customers.

Lazard Freres & Co., one of the firms asked to bid, used to employ Jenny Sanford, the governor's wife. Jenny Sanford was part of a group that interviewed bidders. The governor said she was involved because his office is short on financial experience.

Lazard Freres Managing Director Joseph Maybank submitted a proposal and wrote that he felt confident doing so "without the appearance (or reality) of potential conflict."

Credit Suisse First Boston, however, was the firm eventually chosen to do the study.

At least four companies bid on the work. Most said they would look into a variety of possible Santee Cooper deals, including an initial public offering, an arranged sale, partial sale or the leasing of Santee Cooper to a separate entity. The companies also listed potential buyers and detailed how privatization would progress from an initial evaluation to a "road show," in which investment bankers gauge investor interest and set pricing.

Credit Suisse billed itself to Sanford's office as the No. 1 adviser in utility mergers and acquisitions. It suggested that proceeds of a sale could fund tax cuts or establish a pot of money for venture capital or small-business loans.

Over the years, there have been a variety of studies examining the practicality of selling Santee Cooper. Most were commissioned by the utility and show that power rates for Santee Cooper customers would rise to the level of investor-owned power companies.

Some big industrial companies that use Santee Cooper power have said they will move their operations to other states if their power rates go up appreciably.

Sanford said Tuesday that he didn't know when Credit Suisse's examination, which cost $100,000, would be completed. He said it would be sent to Santee Cooper when it was finished. Santee Cooper has said it expected the study to go to the governor's office.

Credit Suisse has not returned phone calls or e-mails.

Meanwhile, the Senate approved legislation Tuesday that would bar the governor from removing Santee Cooper board members without cause. The bill, sponsored by Senate President Pro Tem Glenn McConnell, also would allow Santee Cooper customers to sue board members for mismanagement and require at least four directors to have work experience with one of the cooperatives that Santee Cooper sells about half of its power to. A similar proposal was still up for debate in a House committee Tuesday.

Santee Cooper executives and directors have said the legislation is unnecessary and could harm the utility and hamstring board decisions. Guerry Green, chairman of the utility board, said Wall Street bond-rating firms also have expressed concerns about the bill.