Sep. 8, 2003
Follow the Money ... Into the Dark
By J. Barlow Herget
RALEIGH - As details behind the Great Blackout of 2003 continue to surface, I was reminded of North Carolina’s energy shortage in the freezing cold winter of 1977.
Gov. Jim Hunt had called on merchants to limit their store hours to 48 a week. He had asked citizens to turn down thermostats to 68 degrees. And he ordered a special commission to come up with some solutions so that we wouldn’t have a repeat of 1977 in 1978.
I provided support to the commission as special assistant to then Secretary of Commerce D. M. “Lauch” Faircloth, who oversaw the state’s Energy Division. Debate on the commission went back and forth, and after one frustrating session, a Utilities Commission friend who had experience working with the representatives of the utility companies shared with me this wisdom about corporate culture.
One utility’s practice was to examine a problem and try to fix it. If, for example, the Utility Commission raised a safety issue, the company would work with the Commission to resolve the matter. Another company’s first reaction was to legally fight the order and lobby the legislature to change the rule. He wondered who spent the most money in the end.
FirstEnergy Corp. of Akron, Ohio, has a record suggesting it takes the second path when it comes to electricity business. FirstEnergy is the power company whose transmission lines and operating system failed last month and helped trigger the blackout.
The company is an investor-owned utility. That means its executives must weigh profits against the public’s welfare in how it delivers electricity. For instance, FirstEnergy’s managers cut back on workers who maintained its transmission lines in order to save money, according to a report by ABC News.
The company’s safety record revealed numerous violations including a hole in the top of the reactor vessel at one of its nuclear plants. A former FirstEnergy senior manager and now consumer lawyer Howard Witcomb described the company’s attitude thusly:
“The mentality of the FirstEnergy senior management [is that] they place a higher regard for profit and power production than the safety of the public.”
Another critic, Mel Weiss, who represents shareholders who are suing the company for allegedly deceiving the public by “cooking the books” said of FirstEnergy, “It’s going to skimp on expenses to make profitability look better than it really is. And that, of course, ultimately hurts the consumer and in this case, maybe 50 million people.”
While the company cut expenses for grid inspections and nuclear safety, its executives spent generously on political campaigns. According to the non-partisan campaign finance watchdog group, the Center for Responsive Politics, FirstEnergy’s Chairman H. Peter Burg helped raise $600,000 for President Bush’s 2000 campaign, and the company’s President Anthony J. Alexander was one of Bush’s “Pioneers” who raised $100,000. He personally gave $100,000 for Bush’s inaugural committee and was subsequently appointed to the administration’s “energy transition team.”
In a more thorough examination of the company’s political contributions, the Cleveland Plain Dealer said FirstEnergy “generates the most political juice” among Ohio’s electric utilities. The newspaper detailed the company’s lobbying efforts at the national, state and local level and reported that FirstEnergy “ranks sixth nationally in money spent by utilities on lobbyists.”
The company in 2002 spent $2.2 million on lobbying and it gave over $1 million to political parties in the 2002 election cycle, 70 percent to Republicans and 29 percent to Democrats. One Ohio state senator, when asked what the company gets for its money, replied, “Everything it ever wanted.”
Sadly, this record is not shocking news. Indeed, given our current campaign finance system, the contributions are legal and FirstEnergy, in the words of one of its spokesmen, “has a right to participate in the political process.” (Thanks to campaign finance reporting laws, you and I now know about these large sums. These gifts were undisclosed in the old days.)
North Carolina’s electric utilities did a good job in avoiding the Great Blackout. They explained to the state Utility Commission in a recent hearing on the subject that their respective generating and transmission systems are better prepared for such a crisis.
These utilities, however, “participate in the political process” with thousands of dollars in lobbying and campaign contributions, not unlike FirstEnergy. North Carolinians can and should follow that money and rightfully ask, “What are our utilities getting for their money?”
None of us, including the utilities, wants another Great Blackout.
Barlow Herget is a writer and consultant who served two terms on the Raleigh City Council.
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