In Duke Energy’s version of a monopoly game, it rolls the dice and doles out thousands of dollars in campaign contributions to candidates for state elected office. But it’s not much of a gamble. Rather, when one reviews the company’s public filings, a pattern emerges of targeted gifts to key lawmakers that ultimately will do Duke’s bidding. In the end, Duke can reap billions in profits, and it’s North Carolina families and businesses who lose.
Earlier this month, a complaint was submitted to the State Board of Elections requesting an investigation into an alleged cover-up of illegal campaign contributions from Duke Energy’s Political Action Committee. The complaint, filed by former executive director of Democracy North Carolina, Bob Hall, states that Duke’s PAC violated state law by contributing $41,600 to eight members of the General Assembly ($5,200 each) last December, when the PAC had already maxed out its allowable yearly donations to those legislators.
According to the complaint, Duke then requested (and received) refunds from the eight legislators. Legal or not, the timing of the donations exposes a clear attempt by Duke Energy to buy support for its ratemaking bill, Senate Bill 559, from key leaders immediately prior to the start of this year’s session. Each of the eight recipients either hold a top leadership position or ended up sponsoring the bill.
Some have asked, “Well, why wouldn’t Duke do this? Doesn’t every corporation have the right to make campaign contributions to influence policy in its favor?” Under current campaign finance law, sure. But the problem in Duke’s case is that it is granted state-sanctioned monopoly control over the sale of electricity and all investments required to provide that electricity in its service area. No competitors are allowed. In exchange, Duke’s investments and the rates it charges customers are regulated by the state.
So with Duke writing a bill that changes the rules, and then making campaign gifts — right before the legislative session begins — to the very elected officials who can make sure it passes, state oversight seems meaningless, at best. The fact is, somebody needs to protect families and businesses from things like Duke’s catastrophic coal ash spill in the Dan River, pollution from Duke’s power plants, Duke’s more frequent rate increases, and Duke’s pending “grid improvement” boondoggle. And it’s not going to be Duke.
To put Duke’s extra campaign donations in the context of SB 559, let’s do a little math. If Duke’s preferred rate-making provisions pass, the bill could generate billions in extra profits for the electric monopoly over the next decade or more. That’s because it would authorize what is known as a “banded return on equity,” which would increase the profit Duke is allowed to earn on its investments from 9.9 percent up to as high as 10.9 percent. That alone would generate an estimated $112 million a year in extra profits for the utility — paid for by you and me.
Duke also wants to expand its spending by $23 billion over the next ten years for coal ash clean-up and what it calls “grid improvement” investments, and it wants to get that spending rubber-stamped in advance through the second controversial provision in the bill known as a “multi-year rate plan,” virtually guaranteeing these costs would be passed on to ratepayers with less accountability for Duke.
For months, SB 559 has stirred tremendous opposition from pretty much everybody except Duke. On Wednesday, exemplifying the monopoly’s corrupting influence over our legislators, the new bill — including the provisions that Duke wants — was published and added to the Senate’s calendar just minutes before the Senate convened, thus preventing the public a chance to respond or contact their legislators. The bill passed the Senate 26-16, and it now moves the House.
The eyes of North Carolina are on our elected officials in the House and on the governor. They cannot allow our democracy to be undermined in this fashion, and allow Duke to run up extra profits at the expense of consumers. Should they fail the public in this regard, and pass Duke’s bill in its most recent form, the public should hold these legislators and the governor accountable.
Or, perhaps, we should be thinking about ending this game of electric monopolies altogether.
Rory McIlmoil is a Senior Energy Analyst for the nonprofit, nonpartisan group Appalachian Voices, based in Boone.