The trade association for investor-owned electric utilities ran a training camp last December to teach lobbyists and executives from the nation’s utilities how to run winning political campaigns, using as case studies some of the most controversial efforts by utilities to defeat clean energy policies in recent years.
The Edison Electric Institute (EEI) hosted its week-long “Campaign Institute,” at Georgetown University’s business school in December 2019, billing the event as a “partnership with Georgetown University.” Dozens of high-ranking government affairs and communications executives attended the training camp from companies like Alliant Energy, ConEdison, Dominion Energy, Duke Energy, DTE Energy, Entergy, Evergy, NationalGrid, NextEra Energy, PG&E, PNM, PPL, Xcel and their subsidiaries.
Materials from the week-long event obtained by the Energy and Policy Institute give the impression of an industry that perceives itself to be under siege from activists who are seeking a host of policy changes, many of them intended to force utilities to decarbonize in order to address climate change.
“At Edison Electric Institute, we were seeing more and more that we have issues that are being litigated not only in state legislatures, public utility commissions, but also at the ballot box with ballot initiatives,” EEI Executive Vice President of Public Policy and External Affairs Brian Wolff in a video from EEI promoting the Institute.
“We really want to educate and campaign-ready our companies and our executives and that’s what we’re doing at the Campaign Institute,” Wolff continued.
EEI warned of emerging policy threats, many motivated by climate
In a presentation titled “Enduring and Emerging Industry Issues,” EEI’s Executive Director of External Affairs Brad Viator divided the “major categories of risk” facing utilities into three areas: Climate, Infrastructure Projects, and Business Model Changes.
Viator’s presentation named more specific risks within each category, including:
Climate: “gas constraints along the coasts,” including proposals to ban gas use in buildings in New York and Seattle; climate action by Congress after the election.
Infrastructure: “pipelines are increasingly difficult to build”; difficulty to build transmission lines and earn high profits from them.
Business Model: “restructuring proposals: NV, AZ, FL, VA?”; campaigns to bring investor-owned utilities under municipal control in “Pueblo [CO], California, Maine, New York, Chicago”; “community choice aggregation”; “pressure to create wholesale markets – CO and the Carolinas.”
Viator also named solar net metering and renewable energy portfolio standards as ongoing challenges.
Advocates are pursuing most of the policies that Viator named as challenges as levers to hasten the transition from fossil fuels to clean energy by utilities, which are not voluntarily decarbonizing at rates necessary to stave off the worst impacts of climate change.
Viator referenced “pressure to create wholesale markets” in the Carolinas, for instance. Analysts released a report this week noting how a regional transmission operator in the Southeast could reduce carbon emissions by 37 percent. Utilities in the Southeast oppose the idea, and a dark-money group that appears aligned with the industry has been running ads against it.
FirstEnergy campaign, now synonymous with corruption, presented as case study
The Campaign Institute’s curriculum featured three case studies from utility companies. Two of those focused on highly controversial efforts by utilities to overturn or prevent clean energy-supportive policies.
One case study, from FirstEnergy, boasted of the company’s work to pass HB 6 in Ohio and to defend the legislation from a repeal ballot initiative. HB 6 bailed out FirstEnergy’s coal and nuclear plants and ended Ohio’s clean energy and energy efficiency standards.
That effort by the company led to a bombshell scandal last month, when federal corruption charges stemming from HB 6’s passage sent FirstEnergy’s stock cratering and the company into turmoil, with customers and investors lining up to file class-action suits against the utility. Prosecutors have not charged FirstEnergy or its executives in the criminal case at this time.
FirstEnergy’s VP for State and Local Government Affairs and Economic Development, Joel Bailey, presented on the HB 6 campaign along with Holland Consulting Services’ Ken Holland.
The presentation described the broad history that led to HB 6 passage, including earlier failed efforts by FirstEnergy to secure bailouts from Ohio and from the Trump administration.
The slides did not reference the payment by FirstEnergy and its subsidiaries of over $60 million to a 501(c)(4) dark money group that formed the slush fund at the root of the federal bribery charges, but they did include a snapshot of the Ohioans for Energy Security website with the identifying domain name. Ohioans for Energy Security is the “front company” described by federal investigators as a major component of the criminal Enterprise at the heart of the alleged racketeering ring fueled by FirstEnergy’s money.
Bailey and Holland’s slides did note that “HB 6 Supporters also employed ‘blockers’ to mirror signature gatherers and provide counter messages” in an attempt to thwart an effort by environmentalists to repeal the law.
“This was the first time blockers were used in Ohio election process,” the slide continued. “This gained considerable negative media attention [and] Allegations of illegal activity and intimidation.”
EEI has not been shy in other settings about heaping praise on FirstEnergy for its now highly scandalous political work in Ohio. EEI gave its “Edwin D. Hill” award, which it presents to “leaders who advance issues at the state and local levels” to FirstEnergy and some of the union chapters that worked with it for their efforts to secure passage of HB 6.
“Winning the Ed Hill Award is the World Series in public policy – there’s no greater honor to be honest with you,” FirstEnergy SVP of External Affairs Michael Dowling said in a video about the award. The criminal charges filed in Ohio suggest that the indicted former House Speaker Householder spoke with Dowling 14 times by phone as he worked to pass HB 6.
“[FirstEnergy CEO] Chuck Jones put together a tremendous coalition to get the job done, including labor,” EEI President Tom Kuhn said in the same video. “But he is such a fantastic leader for our industry. He cares, he cares about the industry, he cares about the customer, and he cares about the people, and his employees, so much. And when he has an issue like this to deal with, he throws himself totally into it. He passionately believes it, and that was a major driver to make this thing happen.”
Former Arizona Public Service lobbyist presented on clean energy opposition
Another case study at the Georgetown meeting, from Arizona Public Service, boasted of how that company defeated a 2018 ballot initiative that would have required utilities in Arizona to produce half of their electricity from clean sources by 2030.
APS spent nearly $40 million to successfully defeat that effort, but its opposition to the measure, along with unpopular rate hikes and controversial spending to influence the election of its regulators in 2014 and 2016, led to APS’ growing political toxicity in Arizona. Within 18 months of the ballot initiative, APS’s CEO had resigned amid controversy, and the company had committed to almost the exact same clean energy pathway the ballot initiative, Prop 127, would have required of it.
Based on notes in a powerpoint presentation, participants at the Georgetown meeting would have heard from Arizona Public Service’s ex-CEO Don Brandt and from Vice President of External Affairs Jessica Pacheco on how the company was able to defeat the initiative.
It’s not clear if Brandt attended the meeting, or dialed into it. His speaker notes indicated that he targeted Tom Steyer and former commissioner Kris Mayes. “Here you see former Arizona Corporation Commission chairman Kris Mayes with Tom Steyer, who has provided funding for her aggressively anti-utility agenda. In attempting to change the state’s constitution, Mayes built a close partnership with out-of-state money (much of it from Steyer) because few in state will do business with her,” Brandt said, according to the notes.
Brandt’s notes also attacked the media as biased against his industry.
“Even if you have a good working relationship with your local media, they are not your friend. They need a villain — and too often it is us. The standard approach is anti-corporation. We can navigate through it if we understand it.”
Brandt also planned to say, per his notes, that he would “encourage you to engage with your partners at the national and local levels and with industry associations — NEI, EEI, NAM, chambers of commerce to name a few. Engage them and coordinate efforts. Make sure they are up to speed and understand what is happening on the ground. Tom Kuhn and his staff at EEI were with us each step of the way, and their efforts were much appreciated.”
“There is nobody who sees your message who should not understand it,” Pacheco said, according to the speaking notes. “What is Prop 127 going to do? It is going to raise your bills.”
The message that Prop 127 would raise customers bills was indeed the utility’s message throughout 2018, but by the time of Pacheco’s presentation at Georgetown in late 2019, the company’s new leadership appeared to be singing a different tune. A month later in January, APS’ new CEO Jeff Guldner committed the company to voluntarily meet a nearly identical goal to what Prop 127 would have mandated – 45 percent renewable energy by 2030. In that announcement, APS said that it would transition to clean energy “while maintaining affordable, reliable service for our customers.”
Pacheco was the key architect behind APS’ spending via dark-money groups to influence the election of its regulators on the Arizona Corporation Commission in 2014, beginning a period during which APS’ political reputation grew increasingly toxic; shareholder analysts have increasingly called that toxicity a major risk to the company.
Brandt left APS in November 2019. Pacheco will leave APS in early October of this year, according to an email Guldner sent last week.
The third utility presentation was from NV Energy, which described its successful defeat of a ballot initiative that would have restructured Nevada’s energy market, breaking the company’s monopoly over retail electricity sales.
EEI’s posture appears out of step with ESG investor concerns
EEI’s highlighting of the Ohio and Arizona case studies indicates that while it aggressively works to rebrand the utility sector as clean, the trade association was, as of December, continuing to pursue a hostile posture toward many clean energy policies, and to at least look the other way on dark-money efforts by utilities to win political victories.
Those stances are increasingly out of step with the demands of large segments of “ESG” investors – those interested in environment, social and governance – as well as some mainstream investors
In the wake of the FirstEnergy HB 6 scandal, analysts from Bank of America wrote notes examining which other utilities may be exposed to risks of dark-money spending of the type that FirstEnergy pursued and which led to the corruption charges there. Dark-money spending and other astroturf campaigns have been common in the utility sector in recent years.
A Norwegian asset manager just divested from Southern Company over that utility’s anti-climate political advocacy, echoing previous calls by other large asset managers for utilities to align their political advocacy with the Paris Agreement.
Georgetown faculty gave presentations to utilities
In addition to hearing the case studies, the utility executives received presentations from outside consultants, PR firms like Adfero and Georgetown faculty, who gave presentations with titles like “Communicating with Special Interests” and “CSR: Or How to Avoid a Campaign.”
“Avoid pay for play; Real partnerships/relationships” read one slide in a presentation from Mary Cheney of New Troy Strategies.
Another presentation from an election lawyer at Ballard Spahr offered utilities guidance on how to avoid violating laws when spending on elections; much of the guidance runs contrary to the case studies presented by FirstEnergy and APS.
“The best advocacy campaign can quickly derail into a legal and public relations nightmare if you don’t comply with the law,” a description of the session says, offering prescience into the scandal that would burst into the open a few months later in Ohio.
In the actual presentation, the lawyer advised: “Do not be the sole or dominant funder of an organization (if you want it to be viewed as “independent”),” as APS has been for ballot initiatives and independent expenditures in Arizona elections for years.
A presentation from communications consultant Michael Maslansky, who for years has offered guidance to EEI on how utilities can brand themselves as greener to customers, noted that “we’ve lost the benefit of the doubt” and that “they challenge your motives” in a slide showing pictures of utility foundations offering checks to charities. Utilities often use their charities tactically to support their political agenda.
“What’s the message to protect the role of natural gas?” Maslansky asks the executives to consider in another slide.
EEI’s operating budget is funded by dues paid by the utilities, which in turn recover those costs from ratepayers. That means that the costs of EEI’s Campaign Institute and its partnership with Georgetown University would likely have been paid out of utility customers’ electric bills.
Georgetown University announced in February of this year that it plans to divest from public securities of fossil fuel companies within the next five years.