Fueling the Debate
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High-Voltage Campaign Contributions Drive Electric Deregulation Efforts FUELING THE DEBATE A Report on Money and Electric Deregulation Legislation in the Midwest By The National Institute on Money in State Politics with assistance from The Midwest States Center TABLE OF CONTENTS Foreward & Acknowledgments…………………………………………………………2 Methodology……………………………………………………………………………..3 Introduction………………………………………………………………………………3 Summary…………………………………………………………………………………4 Individual State Profiles Illinois……………………………………………………………………………7 Michigan………………………………………………………………………..16 Indiana…………………………………………………………………………..23 Iowa……………………………………………………………………………..28 Minnesota……………………………………………………………………….39 Wisconsin……………………………………………………………………….45 Conclusion……………………………………………………………………………….49 Footnotes…………………………………………………………………………………50 1 FOREWARD & ACKNOWLEDGMENTS In March 2000, the National Institute on Money in State Politics embarked on a collaborative effort to explore the effects of campaign contributing on public policy in six Midwestern states. Funded by the Joyce Foundation, the goal was to produce a series of reports that would give the public some insights into how special interests used campaign contributions to further their public policy agendas. After surveying public-interest groups and news articles concerning legislation in the region, the Institute determined that energy deregulation was an issue of critical importance. Principal authors of this report were Edwin Bender and Denise Roth Barber of the Institute, Brad Lint of the Midwest States Center, and Roger Bybee of Wisconsin Citizen Action and the Midwest States Center. Research and other assistance was provided by the following individuals and groups in the region: • Illinois — William McNary of Illinois Citizen Action; John Cameron, formerly with Illinois Citizen Action and now with AFSCME; Cindi Canary of the Illinois Campaign for Political Reform; Kent Redfield of the Illinois Legislative Studies Center’s Sunshine Project; Martin Cohen of the Citizens Utility Board; Hans Detweiler of the Environmental Law Project; • Indiana — Grant Smith and Dave Menzer of the Indiana Citizens Action Coalition; attorneys Tim Peterson and Reed Cearley; • Iowa — Lisa Davis Cook, former program organizer for Iowa Citizen Action Network; Lyle Krewson, Sierra Club, Iowa chapter lobbyist; Jan Laue, executive vice president of the Iowa Federation of Labor, AFL-CIO; Rick Kozin, Iowa Citizen Action Network executive director; Joan Lucas, Chairwoman of Money and Politics (MAP) Iowa; • Minnesota — Dave Mann, former executive director of Minnesota Alliance for Progressive Action; Beth Fraser, Minnesota Alliance for Progressive Action public policy organizer; Marie Zellar, Clean Water Action Alliance Minnesota state director; Diana McKeown, Clean Water Action Alliance energy program coordinator; Michael Noble, Minnesotans for an Energy Efficient Economy executive director; • Michigan — Johnston Mitchell and Barbara Moorhouse of Michigan Campaign Finance Network; Lynn Jondahl of the Michigan Prospect for Renewed Citizenship; Linda Teeter of Michigan Citizen Action; James Clift of the Michigan Environmental Council; Dana Debel of the Michigan United Conservation Council; Rick Coy of Association of Businesses Advocating Tarriff Equity (ABATE); • Wisconsin — Dave Poklinkoski of IBEW Local 2304; Nikki Anderson of Customers First!; Steve Hiniker of Citizens Utility Board; Roy Thilly of Wisconsin Public Power Inc.; and Reps. Lee Meyerhofer and Peter Bock. 2 Q Communications of Helena, Montana, coordinated design and production of the report. METHODOLOGY Campaign contributions data used for this study were collected from official campaign- finance reports filed by the candidates in each of the states. Also, where possible, researchers obtained official reports detailing the funds that deregulation proponents spent on lobbyists. The Institute also built databases of contributors to pro-deregulation political action committees from official records and cross-referenced that data with contributor data reported by candidates in the relevant election cycles. Researchers identified pro-deregulation interests through an extensive review of news articles and interviews with contacts in each of the states. Through the use of official state Web sites, they tracked the legislative history of key pieces of legislation in each state, examining who sponsored the legislation and who voted for it. INTRODUCTION In the past five years, the country’s electric utility industry has mounted a nationwide effort to deregulate at the state level. The debate focuses primarily on whether and how to separate the generation of electricity from other electric services (transmission, distribution) so retail customers can shop for the electricity supplier of their choice. In this traditionally regulated industry, electricity is provided to retail customers by utilities that enjoy geographic monopolies. In exchange for the monopolies, utilities have their rates set by regulators aiming to simulate competitive market forces while protecting consumers from unjust costs. But that is now changing – rapidly. Fueled by millions of dollars in campaign contributions to state-level candidates, proponents of energy deregulation have been able to get legislation passed in nearly half the states in the country in less than five years, radically changing the economics of the industry. The legislation, which abandons decades of regulatory experience, comes in response to a quest for increased profits for the investor-owned electric utilities rather than any systemic problem with the production or delivery of electricity to consumers, either corporate or individual. With no audible outcry for change from the public, the issue has risen to prominence in state legislatures through a potent mixture of campaign contributions and intense lobbying. In March 2000, the National Institute on Money in State Politics set out to explore the role of campaign contributions on public policy in six Midwestern states. Supported by the Joyce Foundation, the goal was to create computer databases of campaign contributions suitable for study by researchers and journalists, as well as a series of 3 reports that would give the public new insights into how powerful interests might use campaign contributions to advance their own agendas in the public policy process. The Institute, a national clearinghouse of state-level campaign-finance information, assisted by the Midwest States Center, a regional public-interest group, explored the effects of campaign contributions on energy deregulation in six Midwestern states — Illinois, Indiana, Iowa, Michigan, Minnesota and Wisconsin. SUMMARY In the 1998 election cycle alone, energy companies contributed more than $9 million to candidates for state-level offices in 37 states.1 Of those states, 17 have enacted energy deregulation.2 Candidates in those 17 states received the lion’s share, 76 percent or $6.9 million, of the total industry contributions found in the Institute’s 1998 data sets. Electric utilities in the 17 states enacting electric deregulation gave generously on both sides of the aisle, somewhat favoring Republicans over Democrats, 56 percent to 44 percent, respectively. This contribution pattern may indicate they were more interested in access to lawmakers on both sides of the aisle than in any strong political ideals. The totals contributed, while relatively small when compared to national contribution levels, are significant at the state level, where generally House races are won by candidates who raise less than $30,000 and Senate races are won by those who raise less than $100,000.3 Contributions of $100, $250 and $500 become quite meaningful in this context. In 1997, Illinois became the first among the six Midwest states studied in this report to pass an energy deregulation bill. Illinois also led the pack in campaign contributions, receiving more than half of the $6.6 million given by deregulation proponents to campaigns in these six states. Michigan was next to pass a deregulation law, in the spring of 2000, and was also second in receiving campaign contributions from pro-deregulation interests. Third in deregulation contributions was Indiana, which passed a primer to deregulation in 1995 but has thus far been unsuccessful in passing full deregulation legislation due to conflicts among the major well-heeled players. In the remaining three states — Iowa, Minnesota and Wisconsin — deregulation Contributions from Pro-Deregulation Interests $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 4 $0 Illinois '95- Michigan '97- Indiana '97- Iowa Minnesota Wisconsin '97 6/00 '98 '97-2/00 '95-'98 '97-'99 proponents have attempted to get legislation passed. While unsuccessful thus far, they are hard at work preparing for future legislative sessions — and their contributions are beginning to mount. While the amount of money poured into campaign coffers by deregulation advocates was substantial, perhaps even more striking was the very direct targeting of the contributions to those in a position to advance the interests of the deregulation proponents. This targeted giving was soundly demonstrated in each state. • In Illinois, nearly half of the $3.5 million spent by pro-deregulation interests in the 1996 elections went to Gov. James Edgar and the four legislative leaders from both sides of the aisle who control the legislative agenda. The contributions preceded the session when the state’s electric deregulation