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 law was passed.
• As an Iowa gubernatorial candidate, Democrat Tom Vilsack was all but financially shunned by those promoting deregulation. Yet when Vilsack emerged the surprise victor, they quickly re-opened their checkbooks and gave generously to his campaign and his inaugural committee. Vilsack subsequently became a booster of electric utility deregulation and offered his support for a controversial deregulation bill under consideration by the Iowa General Assembly.
• In Michigan, members of the committees through which the deregulation bill passed received special monetary attention from the pro-deregulation interests. The average received by committee members was $6,461 — double the average received by those not on the committees ($3,283). Further, the Senate committee chairman and sponsor of the deregulation bill, Sen. Mat Dunaskiss, received $15,575. Committee members in Illinois were also highly favored (receiving $15,370 compared to the $7,965 average for non-committee members), as they were in Iowa and Minnesota.
• In Indiana, legislative leaders of both parties received an average of $6,457 from deregulation backers, twice the average that was given to non-leaders, $3,163.
• Wisconsin Gov. Tommy Thompson, who was one of the primary movers of deregulation legislation, received 43 percent of all the contributions by deregulation proponents in that state.
A majority of the $6.6 million that went to candidates, 81 percent, was poured into legislative races, while 19 percent went to gubernatorial and other statewide races. Overall, 76 percent of the lawmakers holding office when the deregulation proposals were before the various state legislatures received money from deregulation proponents. In Illinois and Michigan, the first two states to adopt deregulation, every lawmaker who held office during the deregulation debates received money from deregulation proponents. In Iowa, Indiana and Wisconsin, more than 75 percent were recipients.
5 In preparation for moving the legislation, those in leadership positions received an average of $14,180 — more than four times as much as legislators not in leadership positions ($3,519). Nowhere was this pattern of giving more apparent than in Illinois, where the four extremely powerful legislative leaders received on average $51,852 from pro-deregulation interests, compared to the $8,177 received by those not in a leadership position. In Iowa, Indiana and Minnesota, legislative leaders received almost double the contributions received by non-leaders.
Incumbents seeking re-election, who typically enjoy a 90 percent success rate, received an average of $6,495 from deregulation proponents. By contrast, their challengers received an average of $2,024. Illinois incumbents were a prime example of this pattern of giving. There, incumbents received an average of $17,786, or five times more than the challengers’ average of $3,085. Iowa’s incumbents, receiving an average of $3,197, were also highly favored over their challengers, who received $759 on average.
Pro-deregulation interests favored Republican candidates over their Democratic counterparts. In the six states studied in this report, Republican candidates received an average $7,000 per candidate from deregulation backers, significantly more than their Democratic counterparts, who received $2,855 per candidate. Further, in Minnesota, 72 percent ($160,867) of the money that went to the six state-level political party committees went to the three Republican committees (the Republican Party of Minnesota, the House Republican Campaign Committee and the Senate Republican Election Fund).
Special Interests behind Electric Deregulation Just who was behind the push for electric deregulation in the Midwest? Electric utility companies were the key movers and shakers, often accompanied by large industrial customers who felt they too stood to gain in a deregulated environment. Of the $6.6 million given to candidates in the Midwest, electric utility companies accounted for $4.8 million (73 percent) and large industrial consumers contributed the remaining $1.8 million (27 percent).
In several states, electric utilities and large industrial consumers joined forces with each other. Iowa, for example, saw the formation of “Iowans for Electric Choice,” an umbrella organization of electric utilities and large industrial and commercial users of electricity. In Indiana, two of the state’s five electric utilities — American Electric and Cinergy — joined forces with the Indiana Manufacturers Association and the Indiana Industrial Energy Consumers (INDIEC), a powerful coalition of industrial customers. In Illinois, two competing coalitions of electric utilities and users formed: the Illinois Coalition for Responsible Electricity Choice, led by the state’s top three utilities along with the Illinois Manufacturers Association and the Illinois Retail Merchants Association; and the Consumer Choice Partnership, which included Central Illinois Light Co. (CILCO) and Wisconsin Power & Light, as well as large consumers, such as the International Mass Retailers Association. And in Wisconsin, a broad coalition of consumers, public utilities
6 and the state’s smallest investor-owned electric utility, Madison Gas & Electric, formed to oppose a utility coalition called “Energize Wisconsin,” representing the state’s largest gas and electric companies. In Michigan and Minnesota, large electrical customers formed coalitions to protect their own interests.
Several large interests spread their cash across several states. PACs and individuals employed by Enron Corp., a Houston-based energy firm, gave to candidates in four of the six states. They made their largest donations in Michigan ($21,350) and Iowa ($19,805), with smaller contributions to Wisconsin ($1,050) and Minnesota ($1,400). PACs and employees of Northern States Power of Minnesota gave a total of $46,555 to Minnesota candidates and $6,425 to Wisconsin candidates.
Ford Motor Co. had a strong presence in two states where deregulation topped the legislative agendas. The company’s PACs and employees gave Illinois candidates a total of $71,970 and Indiana candidates $11,130. Similarly, General Motors’ PACs and employees gave $165,894 to candidates in Michigan and an additional $19,895 to candidates in Illinois.
This sampling of states in the Midwest, each dealing with energy deregulation at a different place in the legislative process, provides valuable insights into why and how energy deregulation is becoming the law of the land.
BIG FIRMS SPEND $3.5 MILLION TO SHAPE ILLINOIS DEREGULATION LAW
Illinois was the first state in the Midwest to deregulate its electric utility industry when it passed the “Illinois Electric Service Customer Choice and Rate Relief Law” in 1997. At the time, Illinois’ electricity rates were about 30 percent higher than the Midwestern average.4 As the state was about to begin its experiment with electrical deregulation, one enthusiastic proponent predicted that the law “would be watched by the entire United States of America.”5
Give-to-Get Politics If the legislative process leading up to passage were to receive serious scrutiny from the nation, it would be recognized as a classic case of “give-to-get” politics as practiced by the state’s major electric utilities and large industrial consumers. Deregulation proponents gave $3.6 million in political contributions during the 1996 election cycle and during the calendar year 1997 when the bill was under consideration. In return, they received passage of House Bill 362, allowing for deregulation of Illinois’ electric industry.
The passage of this bill was quite a feat, considering competing proposals vied for the spotlight, each with clout-heavy backers. Leading the charge for a gradual phase-in of deregulation was the Illinois Coalition for Responsible Electricity Choice, a powerful
7 coalition led by the state’s top three investor-owned electric utilities — Commonwealth Edison (ComEd), Illinois Power and the Central Illinois Public Service Co.6 Other members of the coalition included the Illinois Manufacturers Association, the Illinois Retail Merchants Association and the Chemical Industries Council of Illinois.7
Advocating instead that all consumers, not just industrial users, should be able to choose their provider and that choice should be available sooner than the time frame espoused by ComEd and its allies, the Central Illinois Light Co. (CILCO) formed the Consumer Choice Partnership to counter ComEd’s proposal.8 Joining the Partnership were Houston- based energy giant Enron Corp., Caterpillar Inc., Wisconsin Power & Light Co., the International Mass Retailers Association, Ford Motor Co., Mobil Oil, Uno-Ven Co. and JC Penny Co., among others.9 Other major players in favor of earlier choice included RR Donnelley & Sons Co., the Building Owners and Managers Association of Chicago, the Illinois Restaurant Association, General Mills Inc., Nestle Inc., Reynolds Metals Co. and World Color Press Inc.10
In all, the majority of the campaign contributions from deregulation proponents, $2.4 million, came from large customers, such as the Illinois Manufacturers Association11 and the Illinois Retail Merchants Association12 and their member groups. The four major electric utilities that weighed in heavily on the debate gave just under $1 million. Table 1 lists deregulation proponents and the amount each gave during the 1996 election cycle through the 1997 legislative debate on the bill. The electric utilities and their allies topped off the deregulation surge by flooding the Capitol with dozens of lobbyists and showering legislators with “thousands of dollars worth of gifts.”13
Table 1 1995–1997 Campaign Contributions from Pro-Deregulation Interests
Pro-Deregulation Interests Contributions Illinois Manufacturers Association (IMA) $944,860 Commonwealth Edison Co. $371,907 Illinois Power Co. $284,187 Sears & Roebuck Co./IRMA $247,125 Central Illinois Public Service Co. (CIPPS) $209,348 Caterpillar/IMA $182,103 Thrall Car Manufacturing Co./IMA $175,466 Walgreens Co./IRMA $159,175 Illinois Retail Merchants Association (IRMA) $155,217 Illinois Restaurant Association $135,000 Jewel-Osco/IRMA $87,750 Building Owners & Managers Association Of Chicago $77,950 Ford Motor Co./IMA $71,970 McDonalds Corp./IRMA $62,301 National Federation Of Independent Businesses (NFIB) $51,095 Montgomery Wards/IRMA $47,000
8 Central Illinois Light Co. (CILCORP) $45,713 Spiegel Publishing Co./IRMA $44,750 Dominicks Finer Foods Inc./IRMA $41,379 RR Donnelley & Sons Co./IMA $38,652 Peoples Energy $38,452 Uno-Ven Co. $28,750 Nalco Chemical Co./IMA $27,750 Illinois Hotel & Motel PAC $24,950 Chemical Industry Council Of Illinois $23,940 General Motors Corp./IMA $19,895 Illinois Energy Association $8,850 JC Penney Co./IRMA $8,000 Mitsubishi Co./IMA $6,775 Reynolds Metals Co. $3,850 Osco/IRMA $3,350 Marshall Field’s/IRMA $3,000 Niemann Foods Inc./IRMA $1,625 World Color Press, Inc. $1,200 Maytag Corp./IMA $650 Nestle Inc./IMA $300 TOTAL $3,630,936
The Making of Illinois’ Electric Deregulation Law After months of intense debate, the House overwhelmingly passed a version of HB 362 that was strongly supported by Commonwealth Edison and Illinois Power. The companies’ PACs and employees gave a combined $656,094 during the 1996 election cycle through the 1997 legislative debate. Adamantly opposing the bill was CILCO, a much smaller contributor ($45,713). Sympathizing with CILCO, however, was Republican Senate President Pate Philip, who believed ComEd’s bill penalized companies like CILCO, which had done a good job of lowering rates already.14 Because of his objections, Philip stalled the bill in the Senate and sent it instead to the Illinois Commerce Commission for further study over the summer.15
When the Legislature reconvened in October, the heated debate resumed, with the electric utility companies holding fast to their opposing positions.16 In attempts to appease CILCO, which continued to oppose ComEd’s version, the Senate modified the bill, allowing CILCO to be regulated under a more lenient formula and giving it a three-year cushion to protect property tax revenue from districts with nuclear power plants. The Senate also increased the rate cuts customers would enjoy, but only in exchange for delaying the time when customers had a choice of their providers.17 With these modifications, the Senate passed HB 362 in October by a wide margin, 57-2. The House made further concessions to CILCO,18 and as amended, the bill won overwhelming approval, 108-7.
9 All 118 Assembly members and 59 senators received contributions from the pro- deregulation interests, including the 18 senators who were not even up for election in 1996. Those in the Assembly received an average of $15,516 per member, while senators received an average of $21,503 each.
Moreover, the 108 Assembly members who voted for HB 362 in October 1997 received an average of $10,543 from pro-deregulation interests, twice the $5,218 average received by the seven who voted against it. Similarly, the 57 senators who voted for the bill received $21,665 on average, compared to the two opposing senators (Denny Jacobs and George Shadid), who received $16,908 on average. Interestingly, the top recipients of deregulation contributions constituted the voting majority (top 30 in the Senate and top 60 in the House). They received 78 percent of the contributions from pro-deregulation interests, though they made up only 51 percent of the Legislature. (Refer to Appendices A & B to see how each member voted.)
Nearly half (44 percent) of the contributions to policy setters went to the governor who signed the legislation and the four legislative leaders who were responsible for getting the legislation to his desk. Republican Senate President Pate Philip, who received over half a million dollars, was especially key to the bill’s passage. Philip used his leadership position to first stall the bill in the Senate in the spring of 1997, allowing it to re-surface the next fall only after the bill went through significant modifications.19 House Speaker Mike Madigan then held up the Senate’s version until some of his concerns were addressed.20
Table 2 Pro-deregulation Contributions to the Governor and the Top Four Lawmakers (1996 Election Cycle)
Governor and Legislative Leaders Total Received Lee Daniels/House Republican Campaign Committee $644,828 James (Pate) Philip/Republican State Senate Campaign Committee $527,964 Michael Madigan/Democratic Party of Illinois $202,400 Emil Jones/Illinois Senate Democratic Fund $102,850 James Edgar, Governor $94,454 Total Contributions $1,575,646
And the Winners Are… In the end, the law was met with mixed reviews. It was staunchly supported by generous heavyweights such as ComEd, Illinois Power and the Illinois Retail Merchants Association, whose employees and PACs gave more than $2 million in total. But the law was opposed by yet another well-heeled and powerful player, the Illinois Manufacturers Association (IMA) and some of its member groups. Combined, their employees and PACs gave just under $1.5 million ($1,496,21). CILCO gave the law tepid approval, at best.21
10
While those who moved a lot of money into campaign coffers may not have gotten everything they wanted, they played a central part in the negotiations and received key concessions worth millions of dollars. For example, IMA opposed the bill, charging that the transition costs assessed customers who switch to a new provider were too high, as were provisions for municipal energy tax rates. However, businesses would gain access to competitive bidding in 2000, whereas residential customers will wait until 2002.22 And CILCO, which testified against the bill in the Senate committee, conceded later that the bill was made more palatable through changes such as increasing the rate reductions, shortening the stranded cost recovery period, and moving up the start date for competition.23
Be Careful What You Ask For… Three years after Illinois deregulated the electric industry, the Illinois Commerce Commission (ICC) found that “for a variety of reasons, a vibrant competitive environment was not developing in the Illinois retail electric market.”24 Further, the ICC study found that nearly all of the customer switching occurred in the Commonwealth Edison territories, which had the highest electric rates in the state. ComEd lost just over 12 percent of its customers, accounting for about half of the company’s power load. In comparison, none of the more than 4,500 eligible commercial customers switched from Central Illinois Light Co., which traditionally had very low rates. The report also noted that all of the state’s major electric utilities had been acquired by out-of-state owners since the law was approved.
Moreover, many commercial and industrial customers did not experience rate relief, while most residential customers did, as required when the first phase of the law took effect. However, it remains to be seen what will happen with residential rates once the required rate cuts and price freeze that have protected customers from suffering a hit to their wallets expire at the end of 2004.25
APPENDIX A: Contributions to Senators of the 1997 Illinois Legislature by Pro-Deregulation Interests (1995 - 1997)
(The vote referred to in this table is the 10/30/97 Third Reading vote on HB 362.) Floor Senator Party Contributions Vote Yes Philip, James (Pate)/Republican State Senate R $527,964 Campaign Committee Yes Jones Jr., Emil/Illinois Senate Democratic Fund D $102,850 Yes Rauschenberger, Steven J R $49,285 Yes Dudycz, Walter W R $31,300 Yes Syverson, Dave R $29,475 Yes Bomke, Larry K R $27,428 No Jacobs, Dennis J D $26,965 Yes Luechtefeld, David R $24,090 Yes Watson, Frank R $23,375
11 Yes Dillard, Kirk W R $23,150 Yes Mahar, William F R $21,675 Yes O'Daniel, William L D $20,150 Yes Donahue, Laura Kent R $20,075 Yes O'Malley, Patrick J R $19,632 Yes Radogno, Christine R $18,300 Yes Madigan, Robert A R $15,870 Yes Peterson, William E R $14,950 Yes Sieben, Todd R $14,800 Yes Lauzen, Chris R $13,750 Yes Parker, Kathleen K R $13,630 Yes Farley, Bruce A D $13,525 Yes Cronin, Dan R $13,328 Yes Butler, Marty R $12,750 Yes Karpiel, Doris C R $12,500 Yes Shaw, William D $12,450 Yes Rea, James F D $10,350 Yes Petka, Edward F R $10,075 Yes Walsh, Thomas J R $9,310 Yes Walsh, Lawrence D $8,050 Yes Maitland Jr, John W R $7,950 Yes Burzynski, J Bradley R $7,700 Yes Deleo, James A D $7,450 Yes Demuzio, Vince D $7,350 Yes Carroll, Howard W D $6,950 No Shadid, George P D $6,850 Yes Molaro, Robert S D $6,550 Yes Viverito, Louis S D $6,500 Yes Myers, Judith R $6,250 Yes Cullerton, John J D $6,000 Yes Hawkinson, Carl E R $5,950 Yes Weaver, Stanley B R $5,300 Yes Fitzgerald, Peter G R $4,950 Yes Klemm, Dick R $4,250 Yes Clayborne II, James F D $3,800 Yes Trotter, Donne E D $3,750 Yes Fawell, Beverly R $3,650 Yes Geo-Karis, Adeline Jay R $3,350 Yes Berman, Arthur L D $3,050 Yes Bowles, Evelyn M D $2,700 Yes Welch, Patrick Daniel D $2,600 Yes Hendon, Ricky D $2,500 Yes Garcia, Jesus G D $2,200 Yes Halvorson, Debbie Defrancesco D $2,100 Yes Smith, Margaret D $1,900
12 Yes Collins, Earlean D $1,650 Yes O'Bama, Barack D $1,600 Yes Severns, Penny D $1,600 Yes Delvalle, Miguel D $700 Yes Link, Terry D $500 TOTAL $1,268,702
APPENDIX B: Contributions to 1997 Assembly Members by Pro-Deregulation Interests (1995 - 1997)
(The vote in this table is the 11/14/97 vote on Senate amendments 1 & 2 to HB 62) Vote Assembly Member Party Contributions Present Daniels, Lee A/House Republican Campaign R $644,828 Committee Yes Madigan, Michael J/Democratic Party of IL D $202,400 Yes Churchill, Robert W R $84,900 Yes Persico, Vincent A R $30,900 Yes Granberg, Kurt M D $24,768 Yes Jones, John O R $22,350 Yes Ryder, Tom R $21,610 Yes Cross, Tom R $21,350 Yes Mitchell, Gerald L R $21,300 Yes Clayton, Verna L R $21,100 Yes Lyons, Eileen R $19,975 Yes Bost, Mike R $19,475 Yes Klingler, Gwenn R $18,247 Yes Winters, David R $18,185 Yes Hassert, Brent R $17,525 Yes Novak, John Phil D $17,050 Yes Myers, Richard P R $16,350 Yes Kubik, Jack L R $15,360 Yes Rutherford, Dan R $15,267 Yes Tenhouse, Art R $15,125 Yes Bergman, Robert R $15,100 Yes Poe, Raymond R $14,150 Yes Winkel, Richard R $14,050 Yes Turner, Arthur L D $13,800 No Ackerman, Jay R $13,475 Yes Biggert, Judy R $13,300 Yes Stephens, Ron R $12,700 Yes Parke, Terry R R $12,500 Yes Wojcik, Kathleen L R $11,470 Yes Brunsvold, Joel D $11,359 Yes McAuliffe, Michael P R $11,025
13 Yes Kosel, Renee R $10,975 Yes Wait, Ronald A R $10,653 Yes Burke, Daniel J D $10,419 Excused Durkin, James R $10,400 Yes Erwin, Judy D $10,400 No Leitch, David R R $9,950 Yes Wirsing, David A R $9,810 Yes Lang, Louis I D $9,650 Yes Jones, Shirley M D $9,600 Yes Noland, N Duane R $9,525 Yes Saviano, Angelo R $9,500 Yes Hartke, Charles A D $9,400 Yes Lindner, Patricia Reid R $9,350 Yes Meyer, James H R $9,150 Yes Zickus, Anne R $9,000 Yes Dart, Thomas J D $8,975 Yes Mautino, Frank J D $8,975 Yes Moffitt, Donald L R $8,864 No Cowlishaw, Mary Lou R $8,550 Yes Santiago, Miguel A D $8,450 Yes Biggins, Robert A R $8,200 Yes Coulson, Elizabeth R $8,190 Yes Turner, John W R $8,150 Yes Davis, Steve D $8,100 Yes Brady, William R $8,000 Yes Beaubien, Mark H R $7,700 Yes Lawfer, I Ronald R $7,600 Yes Mulligan, Rosemary R $6,750 Yes Capparelli, Ralph C D $6,600 Yes Skinner Jr, Cal R $6,550 Yes Scott, Douglas P D $6,400 Yes Bugielski, Robert J D $6,250 Yes Woolard, Larry D D $5,950 Yes Moore, Eugene D $5,700 Yes Currie, Barbara Flynn D $5,250 Yes Bradley, Richard T D $5,050 Yes Feigenholtz, Sara D $4,950 Yes Schoenberg, Jeffrey M D $4,550 Yes Hoeft, Douglas L R $4,500 Yes Phelps, David D D $4,400 Yes Roskam, Peter R $4,350 Yes Murphy, Harold D $4,110 Yes Pankau, Carole R $4,100 Yes Howard, Constance A D $4,075 Yes Stroger, Todd H D $3,975
14 Yes Flowers, Mary E D $3,750 Yes Morrow III, Charles G D $3,650 Yes Jones, Lovana S D $3,600 Yes Johnson, Timothy V R $3,392 Yes Giles, Calvin L D $3,250 Yes Smith, Michael K D $3,200 Yes Lopez, Edgar D $3,150 Yes Black, William B R $3,100 Yes Wood, Corinne G R $3,000 Yes Hannig, Gary D $2,900 Yes Krause, Carolyn H R $2,900 Yes Deuchler, Suzanne L R $2,850 Yes Moore, Andrea S R $2,850 Yes Fantin, Arline M D $2,800 Yes Younge, Wyvetter H D $2,725 Yes Holbrook, Thomas D $2,650 Yes Kenner, Howard A D $2,600 Yes Davis, Monique D D $2,450 Yes Pugh, Coy D $2,375 Yes McGuire, John C D $2,300 No Slone, Ricca D $2,250 Yes Ronen, Carol D $2,200 Yes Curry, Julie D $2,050 Yes Gash, Lauren Beth D $1,550 Yes Fritchey, John A D $1,500 No McCarthy, Kevin A D $1,400 Yes O'Brien, Mary K D $1,200 Yes Crotty, M Maggie D $1,100 Yes Brown, Michael J R $1,050 Yes Hoffman, Jay C D $1,000 Yes Brosnahan, Jim D $950 No Giglio, Michael D $750 Yes McKeon, Larry D $700 Excused Johnson, Thomas L R $550 Yes Acevedo, Edward D $400 Yes Silva, Sonia D $300 Yes Boland, Mike D $200 No Scully, George D $150 Yes Schakowsky, Janice D D $75 Yes Lyons, Joseph R $00 Yes Reitz, Dan D $00 Yes Righter, Dale R $00 TOTAL $1,830,907
15
ELECTRIC UTILITIES BEAT THE BIG THREE IN MICHIGAN DEREGULATION BATTLE
When Gov. John Engler signed Michigan’s electric utility deregulation bill in June of 2000 at a plush resort gathering on Mackinac Island, Michigan’s lawmakers were greeted with a lavish banquet spread sponsored by the Detroit Chamber of Commerce. Indeed, the Chamber of Commerce and other commercial interests pushing electric deregulation had good reason to celebrate the overwhelming passage of Senate Bill 937 bill that year.
The Michigan Legislature had tried its hand at passing a deregulation bill in both 1997 and 1998. Each time, the investor-owned electric utilities (IOUs) and other special interest groups deadlocked over the details, bringing the issue to a standstill. Only when the governor intervened and introduced his own legislation did the Legislature finally succeed in passing an electric deregulation bill.26 Gov. Engler justified his heavy- handedness in the debate by charging that Michigan’s customers were paying higher electric prices in the absence of deregulation.27 He also warned that without competition that would encourage the construction of new power plants in the state, Michigan would suffer from electricity brownouts.28
SB 937 was overwhelmingly approved by a vote of 25-12 in the Senate and 72-35 in the House. In total, special interests involved on both sides of the issue spent $1,136,241 in campaign contributions during the 1998 elections through June 7, 2000, when the bill became law.
Michigan’s Capitol was not the only place where the battle for deregulation was being waged. Several cases were brought before the Michigan Supreme Court, primarily by Consumers Energy and Detroit Edison. The suits challenged the Public Service Commission’s authority to ask the state’s electric utilities to open their markets to competition.29 The two utilities won in a 4-3 ruling in June 1999, when the Supreme Court reversed an earlier Court of Appeals opinion that allowed the PSC to ask the utilities to transmit power produced and sold by their competitors.
With so much play in the courts, pro-deregulation interests gave $158,319 to two Supreme Court justices who were up for election in 1998. Justice Maura Corrigan, who wrote the majority opinion that favored the electric utility companies, received $94,894. Justice Clifford Taylor, who supported the opinion, received $68,525. In fact, these two Justices were among the top recipients of pro-deregulation money in the six Midwestern states.
Electric Utilities Defeat the Big Three Although several versions were considered during the 2000 legislative session, the bill that emerged the victor (SB 937) had the backing of Consumers Energy and Detroit Edison, along with major business interests represented by the Michigan Manufacturers Association and the Michigan Chamber of Commerce.30 Combined, PACs and employees of these interests doled out $506,952 in campaign contributions.
16
Table 1 Contributions by SB 937 Proponents (1997 through June 2000)
SB 937 Proponent Contributions Michigan Chamber Of Commerce $175,256 Detroit Edison Co. $164,398 Consumers Energy $104,612 Michigan Manufacturers Association $62,686 Total $506,952
But the bill did not enjoy consensus within the business community. Due primarily to the “stranded costs” provision in the bill that customers would be saddled with for several years,31 it was opposed not only by the Big Three automakers — Ford, General Motors and DaimlerChrysler — but also by the Association of Businesses Advocating Tariff Equity (ABATE), a group representing about 30 corporate electric customers in the auto and steel industries, and the Michigan Retailers Association, among others.32 These special interests combined gave $629,288 in contributions.
Table 2 Contributions by SB 937 Opponents (1997 through June 2000)
SB 937 Opponent Contributions Ford Motor Co. $205,740 General Motors Corp. $165,894 Chrysler/ABATE $137,569 Pharmacia & Upjohn/ABATE $30,145 Michigan Retailers Association $29,390 Edward C Levy/ABATE $28,500 Masco/ABATE $14,800 Steelcase/ABATE $9,225 Chrysler/ABATE $3,725 Warner Lambert/ABATE $2,500 Eaton Corp./ABATE $850 Parke Davis/ABATE $500 BASF/ABATE $450 TOTAL $629,288
Despite intense opposition from major heavyweights like the Big Three automakers, the electric utilities’ bill won, due primarily to support from the Republican governor and lawmakers of his party. Following the governor’s lead, SB 937 was almost unanimously supported by Republican legislators, who held a clear majority in both the Senate and the House. On the other side of the aisle, the bill was opposed by minority-ranking
17 Democrats, who agreed with the large industrial consumers that the stranded costs provisions would ultimately discourage competition.33 In total, 77 Republicans voted for the bill, while three voted against it. Of the 55 Democrats, 35 opposed it, while 20 joined the Republicans.
Influencing the Debate Gov. Engler, who received $129,725 from deregulation proponents, was the largest recipient in the state. As stated previously, Engler introduced his own plan in May 2000, breaking the legislative logjam that had tied the bill up since January.
Further, those who voted for SB 937 received an average of $4,341 from the bill’s proponents, approximately double the $2,291 average received by the bill’s opponents. (Refer to Appendix A to see how each legislator voted and how much each received from pro-deregulation interests.)
Lawmakers in leadership positions also were targeted. Leaders received an average of $5,862 from pro-deregulation interests, compared to the $3,904 average contributed to non-leadership legislators.
Members of the committees that reviewed the bills received special monetary attention as well. The seven members of the Senate Technology and Energy Committee, all of whom voted in favor of the bill, received an average of $8,091 from all pro-deregulation interests. In comparison, senators not on the committee received $4,444. Notably, the chairman of the committee and sponsor of the bill, Sen. Mat Dunaskiss, received the most of any senator, $15,575.
The 21 members of the House Committee on Energy and Technology received an average of $5,917 — significantly higher than the $1,837 received by those not serving on the committee. Rep. Robert Gosselin, a General Motors contract employee when not serving in the Legislature, received $5,200 from deregulation advocates in addition to the $32,640 of personal money he spent on his own campaign.
Table 3 Contributions to Legislative Committee Members from Pro-Deregulation Interests
House Energy and Party Contributions Technology Committee Gosselin, Robert R $37,040 Howell, Jim R $11,515 Richardville, Randy R $10,938 Bisbee, Clark R $9,875 Schauer, Mark D $7,250 Cassis, Nancy R $7,025 Middaugh, Mary R $5,150 Thomas III, Samuel D $4,700
18 Kowall, Mike R $4,345 Shulman, Marc R $4,300 Birkholz, Patricia R $3,425 Brown, Bob D $3,100 Quarles, Nancy D $2,850 Garcia, Valde R $2,650 Bradstreet, Ken R $2,125 Neumann, Andy D $2,118 Woodward, Dave D $2,025 Daniels, Ken D $1,375 Hansen, John D $1,150 Lemmons, Lamar D $1,100 Kuipers, Wayne R $200 Total $124,255
Senate Technology and Energy Committee Dunaskiss, Mat R $15,575 Rogers, Mike R $10,750 Schuette, Bill R $8,460 Byrum, Dianne D $8,450 Sikkema, Kenneth R $5,900 Dingell, Christopher D $4,305 Leland, Burton D $3,200 Total $56,640
Total to Both Committees $180,895
Perhaps the most striking aspect of Michigan’s deregulation package is that the combined might and campaign contributions of the Big Three on their home field proved insufficient against the electric utilities and their allies, which had the blessings and backing of the governor and Republican-controlled Legislature.
APPENDIX A: Pro-Deregulation Contributions to Members of the 1999-2000 Michigan Legislature (1997 through June 2000)
(The vote referred to below is the 5/31/00 House Floor vote and 5/23/00 Senate Floor vote) SB 937 Vote Representative Party Contributions Yes Gosselin, Robert R $37,040 Yes Howell, Jim R $11,515 Yes Richardville, Randy R $10,938 Yes Bisbee, Clark R $9,875 Yes Julian, Larry R $9,230 No Shackleton, Scott R $9,009
19 Yes Woronchak, Gary R $7,950 Yes Faunce, Jennifer R $7,550 Yes Schauer, Mark D $7,250 Yes Raczkowski, Andrew R $7,200 Yes Cassis, Nancy R $7,025 Yes Caul, Sandy R $6,850 Yes Van Woerkom, Gerald R $6,800 Yes Perricone, Charles R $6,300 Yes Hager, Lauren R $5,900 Yes Gilbert, Jud R $5,800 Yes DeWeese, Paul R $5,485 Yes Middaugh, Mary R $5,150 Yes Godchaux, Patricia R $4,912 Yes DeRossett, Gene R $4,900 Yes Sanborn, Alan R $4,775 No Basham, Raymond D $4,750 Did not vote Thomas III, Samuel D $4,700 Did not vote Kilpatrick, Kwame D $4,600 Yes Kowall, Mike R $4,345 Yes Shulman, Marc R $4,300 Yes Geiger, Terry R $4,250 No Hanley, Michael D $4,150 No DeHart, Eileen D $4,100 No Wojno, Paul D $3,850 Yes Green, Mike R $3,810 Yes Patterson, Bruce R $3,600 No Cherry, Deborah D $3,475 Yes Birkholz, Patricia R $3,425 No Frank, A D $3,400 Yes Bishop, Michael R $3,325 Yes Law, Gerald R $3,250 No Price Jr, Hubert D $3,154 Yes Brown, Bob D $3,100 Yes Pappageorge, John R $3,065 Yes Johnson, Ruth R $3,050 Yes Allen, Jason R $2,875 No Quarles, Nancy D $2,850 Did not vote Stallworth, Keith D $2,775 No Schermesser, Gloria D $2,725 Yes Hale, Derrick D $2,675 Yes Garcia, Valde R $2,650 Yes Jansen, Mark R $2,600 Yes Rocca, Sue R $2,500 Yes Pestka, Steve D $2,425 Yes Byl, William R $2,350
20 Yes Ehardt, Stephen R $2,270 Yes Toy, Laura R $2,225 No Jamnick, Ruth Ann D $2,200 Yes DeVuyst, Larry R $2,200 Yes Bradstreet, Ken R $2,125 Yes Neumann, Andy D $2,118 No Woodward, Dave D $2,025 Yes Mead, David R $2,025 Yes Tabor, Susan R $2,025 Yes Scranton, Judith R $2,000 No Gieleghem, Paul D $1,900 Yes O'Neil, William D $1,900 Yes Stamas, Tony R $1,900 Yes Richner, Andrew R $1,875 No Baird, Laura D $1,800 Yes Jelinek, Ron R $1,800 Yes Sheltrown, Dale D $1,775 Yes Hardman, Artina D $1,750 Yes Kukuk, Janet R $1,720 Yes Vander Roest, Jerry R $1,700 Yes LaSata, Charles R $1,650 No Switalski, Michael D $1,575 No Minore, Jack D $1,550 No Kelly, Thomas D $1,500 No Garza, Belda D $1,450 Yes Spade, Doug D $1,400 Yes Daniels, Ken D $1,375 No Bogardus, Rose D $1,350 No Dennis, Julie D $1,275 No Scott, Martha D $1,225 No Clark, Irma D $1,200 Yes Clarke, Hansen D $1,175 No Brater, Elizabeth D $1,150 No Hansen, John D $1,150 Yes Reeves, Triette D $1,150 Yes Mortimer, Mickey R $1,105 No Jacobs, Gilda D $1,100 Yes Lemmons, Lamar D $1,100 Yes Jellema, Jon R $975 No LaForge, Edward D $850 Yes Hart, Doug R $850 Yes Pumford, Mike R $800 No Callahan, Bill D $700 No Rivet, Joseph D $700 Yes Lockwood, Patricia D $700
21 Yes Voorhees, Joanne R $700 No Martinez, Lynne D $600 Yes Brown, Cameron R $600 No Tesanovich, Paul D $550 No Rison, Vera D $500 Yes Vear, Steve R $450 Yes Koetje, James R $400 Yes Johnson, Rick R $350 No Prusi, Michael D $300 No Bovin, Douglas D $200 Yes Kuipers, Wayne R $200 No Vaughn, Ed D $125 House Total $356,941
Senator Yes Dunaskiss, Mat R $15,575 Yes Hammerstrom, Beverly R $13,350 Excused Bennett, Loren R $11,875 Yes Bullard Jr, Bill R $10,950 Yes Rogers, Mike R $10,750 Yes Goschka, Mike R $8,900 Yes Schuette, Bill R $8,460 No Byrum, Dianne D $8,450 No Cherry Jr, John D $8,300 Yes Emmons, Joanne R $6,675 Yes McCotter, Thaddeus R $6,376 Yes Sikkema, Kenneth R $5,900 Yes Degrow, Dan R $5,300 Yes Shugars, Dale R $5,170 Yes Hoffman, Philip R $4,950 Yes Gast, Harry R $4,500 Yes Dingell, Christopher D $4,305 No North, Walter R $4,050 Yes Gougeon, Joel R $3,992 No Peters, Gary D $3,900 No Smith, Virgil D $3,600 No Hart, George D $3,500 No Koivisto, Don D $3,350 Yes McManus Jr, George R $3,325 Yes Leland, Burton D $3,200 Yes Young Jr, Joe D $2,900 No DeBeaussaert, Kenneth D $2,840 Yes Stille, Leon R $2,246 Yes Murphy, Raymond D $2,150 Yes Schwarz, John R $1,925
22 No Steil, Glenn R $1,350 No Emerson, Robert D $1,200 No Smith, Alma D $900 Yes Van Regenmorter, William R $750 Yes Jaye, Dave R $250 No Miller Jr, Arthur D $00 No Smith, Virgil D $00 Yes Vaughn III, Jackie D $00 Senate Total $185,214
Legislators’ Total $542,154
SPECIAL INTERESTS GIVE HIGH-VOLTAGE JOLT TO INDIANA’S DEREGULATION EFFORT
Customers in the state of Indiana currently enjoy the eighth lowest electricity rates in the nation.34 Despite these low rates, electric utilities and major industrial consumers have led a concerted effort in the Legislature to deregulate Indiana’s $4 billion electric industry. Their attempts have been stymied thus far, but only because of the inability of these players to reach a compromise amongst themselves.35
Though they disagreed on the particulars of electric deregulation, the state’s five investor-owned electric utilities as well as the major industrial consumers all sought to assure that the issue was at the top of the Legislature’s agendas over the past four years. To that end, they shelled out a combined total of $1,202,217 to candidates during the 1996 and 1998 elections — 65 percent of which went to those who won their races. In both legislative sessions, more than 80 percent of the lawmakers received money from these entities, and the contributions were substantial. Lawmakers received a total of $292,156 from the deregulation proponents in the 1996 election cycle and $490,354 during the 1998 election cycle, representing 5 percent and 7.5 percent, respectively, of all the money given by business interests.
Getting a Foot in the Door The opening battle to deregulate the state’s electric industry was waged in 1995 over Senate Bill 637, which loosened electricity regulation. Rather than continuing to require that electric utilities seek a “certificate of need” from the Indiana Utility Regulatory Commission (IURC) to justify a massive outlay of consumer money for new plants, SB 637 allowed electric utilities to bypass this requirement. Strong support for this bill came from the Indiana Electric Association (IEA), representing the state’s five investor-owned electric utilities — PSI Energy/Cinergy, American Electric Power Co. (AEP), Indiana Power & Light Co. (IPALCO), Northern Indiana Public Service Corp. (NIPSCO), and Southern Indiana Gas & Electric Co. (SIGECO).36
23 Although ultimately winning passage of SB 637, the electric utilities were unable to enlist the support of the state’s major industrial customers. Believing that the bill would simply allow the utilities to make more money without allowing for competitive choices, the Indiana Industrial Energy Consumers (INDIEC), an influential coalition of industrial customers representing about 20 percent of the state’s industrial power consumption, ardently opposed the bill.37 Other major foes included the state’s largest consumer group, Citizens Action Coalition (CAC), which believed the bill would cost ratepayers an additional $8 million to $10 million a year.38
Power Gridlock Since the 1995 passage of SB 637, the prospect of expanded deregulation of the state’s electrical power industry has been deadlocked by the advocates’ inability to agree on not if, but how the industry should be opened to competition. Four deregulation bills were introduced in as many sessions from 1997 through 2000, but they either died or were diluted to a shadow of their former selves.
In January 1997, Senate Bill 427 created a deep rift between and among the state’s power providers, customers and consumer groups. The bill called for all Indiana users of electric power to choose their supplier by 2004 and provided for utilities to cover the costs of introducing competition through fees paid by consumers who switched suppliers during a transition period.39 Drafted by the two out-of-state electric utilities, American Electric Power (AEP) and Public Services Indiana (PSI), it was also supported by the Indiana Manufacturers Association and the INDIEC.40
SB 427 met with stiff opposition from the three Indiana-based electric utilities (NIPSCO, IPALCO, SIGECO) and the Citizens Action Coalition, which believed the bill had special benefits for the two utilities that wrote it.41 IPALCO feared that under SB 427, as originally written, smaller companies like it would face strong competition from bigger companies, such as PSI, for their better customers.42 CAC opposed the bill because of potential hidden costs down the road, particularly for AEP customers in northern Indiana who could have been saddled with more of the ultimate closing costs of a nuclear facility in Bridgeman.43
The bill was introduced by Republican Morris Mills, “recognized as the man many lawmakers look to for direction on utility laws,”44 and chairman of the Senate Commerce and Consumer Affairs Committee. He believed the state’s electric companies would benefit from operating in an unregulated environment.45 Mills received $1,900 during the 1996 election cycle from the proponents of the bill, and nothing from the bill’s opponents.
The proponents of the 1997 bill gave a combined $266,782 during the 1996 election cycle, just slightly more than the bill’s opponents, who gave $233,277 (see Tables 1 and 2).
However, because of the bitter controversy surrounding the bill, Sen. Mills was unable to muster enough votes to get the bill out of his committee. Instead, what started out as a
24 complex 109-page proposal deregulating the state’s electric industry was stripped down to a plan that simply called for a study of electric deregulation by the legislative Regulatory Flexibility Committee, also chaired by Mills.46
Claiming that Indiana could not afford to lose ground to other states adopting deregulation, backers of 1997’s bill tried again in 1998 with Senate Bill 431, also sponsored by Mills.47 However, opponents believed competition in Indiana could wait, contending that the state — with already low power rates — had time to watch what happened in other states.48
Faced with the same staunch opposition as in the previous session, SB 431 bill met a very similar fate as its 1997 version. What started as a 65-page bill allowing customers to choose their electric utility was diluted to a one-page bill that only allowed utilities the option of cooperating with others to transmit electricity over each others’ power lines.49 Yet even that watered-down version was defeated in a last-minute effort by organized labor,50 a significant campaign contributor which believed restructuring the industry would lead to higher prices for consumers.51
Table 1 1995-96 Contributions by Proponents and Opponents of SB 427 (’97) & SB 431 (’98)
Proponents Contributions Indiana Manufacturers Association PAC (IMPAC) $143,690 Indiana Hospital & Health Association/IEC $57,017 American Electric Power (AEP) $26,100 Cinergy/ PSI Energy $20,025 BP Amoco/IEC $13,700 Bethlehem Steel Corp/IEC $4,000 National Steel Corp/IEC $1,500 Bayer/IEC $550 American Maize Products/IEC $200 Proponents’ Total $266,782
Opponents Indiana State AFL-CIO $116,027 International Brotherhood of Electrical Workers $78,275 Northern Indiana Public Service Corp. (NIPSCO) $19,400 Indiana Power & Light Co. (IPALCO) $16,175 Southern Indiana Gas & Electric Co. (SIGECO) $3,400 Opponents’ Total $233,277
Combined Total $500,059
The stalemate dragged on in the 1999 and 2000 sessions, although alliances shifted. In the next two sessions, the state’s five investor-owned electric utilities coalesced to fight
25 off efforts by the industrial customers, who promoted their own version of deregulation. The electric utilities’ efforts to defeat the bills were aided by the state AFL-CIO, which feared that deregulation would allow some of the state’s biggest customers to buy their power from out-of-state utilities, leaving smaller customers to pick up the slack.52
The 1999 session saw the introduction of Senate Bill 648, an expansive deregulation bill supported energetically by the large industrial customers. It would have provided for a choice of an electrical supplier by the end of 2000, capped rates for retail customers from 1999 through December 2005 (at the level of the rates and charges in effect on June 30, 1999), and provided that an electric utility’s formula for sharing net stranded costs among customers could not result in rates and charges greater than those in effect on June 30, 1999.53 However, the bill died a quick death, despite attempts by Sen. Mills to keep it alive by diluting the bill down to a one-page document that would simply establish a pilot program to test deregulation.54
In preparation for the 2000 deregulation debate, the investor-owned electric utilities worked behind closed doors during the summer of 1999 to hammer out their own proposal — though their version never surfaced. Riled that the utilities met without them, the large industrial consumers banded together under the name of “Coalition for Choice”55 and again put forth their own bill. Senate Bill 450 was similar to the 1999 bill, which Sen. Mills sponsored once again on their behalf.56 However, lawmakers were not eager to tackle the issue again, citing the complexity of the issue and the limited time for comprehensive debate during the two-month session.57 As a result, SB 450 failed to even get out of the originating Senate Commerce and Consumer Affairs Committee.
The large industrial consumers promoting the 1999 and 2000 pieces of legislation contributed a combined total of $277,140 during the 1998 election cycle preceeding these sessions, slightly less than the bill’s opponents — the electric utilities and AFL-CIO — which contributed $285,520. Despite being outspent, the proponents were able to get their issue on the Legislature’s agenda each time, even when the outlook for passage remained consistently low.
Notably, during the 1998 election cycle preceding the 1999 and 2000 legislative sessions, the sponsor of the two bills, Sen. Mills, received $1,450 from deregulation advocates — even though he wasn’t up for re-election in 1998. This money represented almost one- fourth of all the contributions he received.
Table 2 1997-1998 Contributions by Proponents and Opponents of SB 648 (’99) and SB 450 (’00)
Proponents Contributions Indiana Hospital & Health Assoc. (INDIEC) $97,025 Eli Lilly & Co./INDIEC $68,946 USX Steel/US Steel/INDIEC $21,785 BP Amoco/INDIEC $20,450
26 Inland Steel/INDIEC $17,950 IN Retailers $12,290 General Motors/INDIEC $11,786 Ford Motor Co. (INDIEC $11,130 Bethlehem Steel Corp./INDIEC $4,275 LTV Steel/INDIEC $4,000 National Steel Corp.INDIEC $2,685 Central Soya/INDIEC $1,600 Cerestar/INDIEC $850 Toyota/INDIEC $570 IN Manufacturers Association PAC $400 AE Staley Manufacturing Co./INDIEC $398 Air Products & Chemical Inc./INDIEC $300 Bayer/INDIEC $250 Rock Tenn Co./NDIEC $225 Ispat Inland/INDIEC $200 Anchor Glass/INDIEC $25 Proponents’ Total $277,140
Opponents Contributions Indiana State AFL-CIO $85,135 PSI Energy/Cinergy $55,600 Indiana Power & Light Co./IPALCO $50,380 Southern Indiana Gas & Electric Co./SIGECO $34,725 Northern Indiana Public Service Corp./NIPSCO $30,698 American Electric Power Co./AEP $23,972 Indiana Electric Association $5,010 Opponents’ Total $285,520
Combined Total $562,660
Not If, But How and When Despite low energy costs and the continuing stalemate between the electric utilities and the large consumers, the two factions intend to press forward in their quest for deregulation of the state’s electric industry.58 Both sides acknowledge that electricity is going to be sold competitively sooner or later, it’s just a matter of how and when.59 And if the pattern of giving seen in previous election cycles continues, lawmakers can expect to receive substantial contributions come election time from the power providers and large consumers hoping to sway the debate to their favor.
27 CHARGING THE DEREGULATION DEBATE IN IOWA
Deregulation of Iowa’s electric utility industry first emerged as a major legislative issue in 1999 during the 78th General Assembly. That year’s bill, House File 740, made it out of the House Commerce and Regulation Committee on a strictly partisan vote, with Republicans supporting and Democrats opposing it. However, after failing to find bipartisan support for the bill, Republican leaders declined to schedule the bill for a floor vote.60 The deregulation proposal introduced in 2000, House File 2530, met a similar fate.61
While unsuccessful thus far in getting a deregulation law passed, proponents made electric utility deregulation a central legislative issue during the 78th General Assembly.62 This was quite a feat in a state where there was no public clamor for deregulation63 and the average retail electricity price stands at the 20th lowest in the country.64 Generous campaign contributions and intensive lobbying efforts fueled the debate.
The primary group advocating electric deregulation in Iowa was “Iowans for Electric Choice,” an umbrella organization of electric utilities and large industrial and commercial users of electricity.65 (For a complete list of IEC member groups, refer to Appendix A).66
The Office of Consumer Advocate (OCA), a division of the Attorney General’s office, has been studying and forecasting the impacts of electric utility deregulation on residential and small business customers for three years running. The agency’s most recent study reached an alarming conclusion: deregulation could cost Iowa consumers up to $197 million each year in electric bill increases, borne primarily by Iowa’s residential and small business customers.67 And the OCA is not alone in its analysis. Another study prepared by the Iowa Utilities Board, a division of the state’s Department of Commerce that regulates utilities, reported that Iowa’s two largest investor-owned utilities (IOUs), Alliant Energy and MidAmerican Energy, stood to reap as much as $1.7 billion in windfall revenues through 2007 as a direct result of deregulating retail electric prices.68
With so much to gain from deregulation of the state’s electric industry,69 it’s no wonder that the IEC and its member groups pushed hard for their agenda. The groups spent $1.37 million lobbying the Legislature and governor during the 78th Assembly, including nearly $570,000 during the 2000 session alone.70 Further, during that session, they deployed 84 lobbyists at the state Capitol in Des Moines to lobby the 150 legislators.71 They also opened wide their war chests of campaign contributions.
Charging the Debate Deregulation proponents began flooding the system with campaign contributions as the debate on deregulation approached. During the 1998 election cycle, total contributions from deregulation proponents jumped to $565,027, a 250 percent increase from contributions in the 1996 election cycle and a 350 percent increase from 1994 contributions.
28 Pro-Deregulation Contributions Per Election Cycle
$565,027 $600,000
$500,000
$400,000
$300,000 $236,730 $165,754 $200,000 $111,180 $100,000
$0 1994 1996 1998 Jan-Feb, 2000
Of the $430,333 that went to 1998 legislative candidates, 80 percent was received by those who won their races and went on to serve in the 2000 Legislature. In the statewide races, IEC interests placed their bets on the losing Republican gubernatorial candidate, Jim Lightfoot, who received 64 percent ($109,756) of the money contributed to statewide candidates ($171,921). Democrat Tom Vilsack, who came from behind to win the gubernatorial election, received just under $32,000 from IEC groups. Even then, most of it came after he won the election. Deregulation supporters kept the contributions flowing after the 1998 election cycle. They added an additional $111,180 to campaign coffers during the first part of the 2000 election cycle, pushing their total contributions to $676,207 since January 1997.
The largest pro-deregulation contributor was the Iowa Association of Business and Industry (IABI) PAC. The IABI is an organization comprised of 1,600 Iowa companies representing all types and sizes of businesses.72 MidAmerican Energy Co. was not far behind; the company’s two political action committees (MidAmerican Energy Co. Executive PAC and MidAmerican Energy Co. Effective Government Committee), along with individuals associated with the company, gave just under $140,000.
Table 1 Contributions by Top Ten IEC Member Groups 1997 through February 2000
Pro-Deregulation Interests Contributions* Iowa Association of Business & Industry (IABI) $143,979 MidAmerican Energy Co. $137,668 Deere & Co. $105,140 Iowa Automobile Dealers Association $87,345 Iowa Association of Electric Cooperatives $39,887 Alliant Energy $26,715 Petroleum Marketers of Iowa $21,334 Enron Corp. $19,805
29 Iowa Association of Municipal Utilities $12,825 Iowa Utility Association $9,670 * Includes contributions from employees and PACs of IEC members
The importance of contributing money to candidates to promote the passage of a deregulation law was made clear to employees of Alliant Energy in a statement made in a company brochure: “We can’t afford to wait or sit on the sidelines,” wrote Erroll B. Davis Jr., Alliant president and CEO. “We must help those candidates who share our outlook shoulder the burden of increasingly expensive campaigns.”73
Courting the Governor-Elect As a gubernatorial candidate, Tom Vilsack was all but financially shunned by IEC members. They instead gave almost $110,000 to his Republican opponent, Jim Lightfoot, the candidate widely expected to win the election. By comparison, Vilsack received $31,645 from IEC members — $19,000 of which came after he won the election. When Vilsack emerged the surprise victor, IEC members quickly re-opened their checkbooks and gave generously to his campaign and his inaugural committee.74 For example, MidAmerican Energy PACs and employees gave Lightfoot $22,150 — all before Nov. 3. They contributed $14,415 to Vilsack’s campaign — $13,400 after the election. MidAmerican Energy also contributed $25,000 to Vilsack’s inaugural committee. Interests associated with another deregulation proponent, Principal Financial Group, gave $1,500 each to Lightfoot and Vilsack before the election. After the election, Principal gave $25,000 to the inaugural committee. John Deere & Co. interests gave Vilsack nothing during the election, instead spending their money ($11,125) on Lightfoot. After the election, however, the company quickly wrote a $10,000 check to Vilsack’s inaugural committee.
If At First You Don’t Succeed… The 1999 deregulation proposal, House File 740, originally received bipartisan support. But Democrats and Republicans soon split on the issue after Republicans voted to remove a section of the proposal that created a severance package for workers who lost their jobs if downsizing occurred during restructuring.75 As a result, after advancing out of the House Commerce Committee on a strict party-line vote, the bill was shelved shortly thereafter by legislative leaders when it became obvious bipartisan support did not exist for the bill.76
Following the failed attempt in 1999, IEC members were buoyed by the decision of newly elected Gov. Vilsack to bring major stakeholders in the issue — representatives of electricity providers and industrial and commercial users, as well as advocates for consumers, workers and the environment — to a “roundtable” where the governor hoped to forge compromise legislation. To bolster their efforts, after the 1999 session ended, they poured an additional $102,252 into lawmakers’ campaigns — $40,490 to legislative leaders alone. (Legislative leaders received a total of $198,644 from pro-deregulation interests during the 1998 and 2000 election cycles.)
Yet despite frequent meetings of the governor’s roundtable prior to and during the 2000 legislative session, it became apparent that the bill was still a political lightning rod
30 between Republicans and Democrats. House File 2530 emerged from the House Commerce and Regulation Committee in February 2000 on a 12-7 party-line vote, indicating that the differences between the two parties had not been resolved.
Demonstrating the power of campaign contributions in building support for the issue, the 12 Republican committee members who voted for HF 2530 received an average of $3,852, or 2.5 times the $1,539 average received by the seven Democratic members who opposed the bill. Notably, the committee chairwoman, Janet Metcalf, who was key to the bill’s passage out of committee, received the most financial backing from PACs and employees of IEC member groups ($8,225).
Table 2 Contributions to House Committee Members by IEC Members 1997 through February 2000
(The vote referred to below is the 2/24/00 committee vote.) Committee Committee Member Party Contributions Vote Yes Metcalf, Janet (Chair) R $8,225 Yes Van Fossen, James R $6,675 Yes Shey, Patrick R $5,500 Yes Jenkins, Willard R $5,230 Yes Hoffman, Clarence C R $4,815 Yes Jacobs, Libby R $3,500 Yes Hansen, Brad R $3,375 Yes Bradley, Clyde R $3,300 Yes Raecker, Scott R $2,625 Yes Holmes, Danny J R $1,175 Yes Dix, Bill R $975 Yes Johnson, David J R $825 YES Total $46,220
No Wise, Philip D $3,425 No Chiodo, Frank D $3,275 No Cataldo, Michael D $1,800 No Holveck, Jack D $1,075 No Osterhaus, Robert J D $600 No Weigel, Keith W D $600 No Taylor, Dick D $00 NO Total 10,775
Absent Drees, James D $125 Absent Doderer, Minnette D $75
Committee Total $57,395
31
Out of Cards At the end of March 2000, the Democratic governor stunned his consumer, environmental, labor and Democratic allies in the General Assembly by announcing that he would sign the deregulation bill into law if it reached his desk. But bitter partisan debate between Democrats and Republicans once again prevented the bill from advancing beyond the committee.
The pattern of giving by deregulation advocates was also very partisan. PACs and employees of IEC members gave Republican lawmakers an average of $4,378 — three times more than the average $1,301 given to Democratic legislators. Republican leaders also received special attention, receiving an average of $8,310, again almost three times more than the average received by Democrat leaders, $2,938.
In the waning days of the legislative session, supporters of the electric utility deregulation bill were scrambling to keep the issue alive. MidAmerican Energy Co. announced that it wanted to build two electric plants in Iowa, which would bring to the state 730 jobs, $600,000 in property taxes and an annual payroll of $1.1 million — if only the Legislature would agree to deregulate the industry. Unveiling that plan so late in the game was seen by some as a troubling ploy. “Every card that can be played will be played,” said Linda Beatty, a citizen lobbyist for AARP, a senior citizens group that opposed the deregulation bill.77 But in the end, the IOUs simply ran out of cards to play, and House Majority Leader Christopher Rants declared the deregulation bill dead for the session on April 19.
Iowa’s investor-owned utilities have folded their hand, at least for the time being. On Aug. 13, 2000, the Des Moines Register reported that MidAmerican Energy “has already decided to pull the plug on a push for electric deregulation in the 2001 session of the Iowa Legislature.”78 Apparently, the widely publicized failures of California’s deregulation regime (rolling blackouts and soaring power bills plagued the state during the hot summer months) have dried up the well of support for deregulation in Iowa.79 It remains to be seen whether MidAmerican’s coalition allies will also be quiescent about the issue in 2001.
Since Iowa is not suffering from high retail electric rates and there is no discernible public clamor for electric utility deregulation, one might expect that Iowa legislators would turn their attention to more pressing issues. But as long as the Legislature continues to be inundated with significant contributions from vested interest groups that effectively set the legislative agenda, electric utility deregulation may well re-emerge as a major legislative issue.
APPENDIX A: IEC Membership List
Iowa Association of Business and Industry MidAmerican Energy Alliant Energy UtiliCorp/People’s Natural Gas Iowa Association of Electric Cooperatives
32 Iowa Association of Municipal Utilities International Brotherhood of Electrical Workers -- Locals 499 & 109 • Iowans for Electric Choice (IEC), whose membership includes: Ag Processing Bridgestone-Firestone, Inc. Calcium Products Cargill Inc. Cedar River Paper Co. Curries Co. Deere & Co. Enron Corp. Enserch Energy Services Four M Paper Genencor International General Mills HON Industries Iowa Association of Community College Trustees Iowa Association of School Boards Iowa Automobile Dealers Association Iowa Community Action Association Iowa Grocery Industry Association Iowa Retail Federation IPSCO Steel Inc. Johnson Controls, Inc. Keokuk Energy Keokuk-Ferro Sil, Inc. Kind & Knox Gelatine Lafarge Latham & Associates LeHigh Portland Cement Maytag Corp. Midwest Carbide Corp. National Electrical Contractors - Des Moines & Quad Cities (NECA) North Star Steel Iowa Penford Products Petroleum Marketers Association PMX Principal Financial Group Quaker Oats Company Rockwell Collins Roquette America Sheet Metal Contractors of Iowa Sioux City Brick and Tile Co. Sivyer Steel Corp. Terra Nitrogen Corp. Viskase Corp.
APPENDIX B: Contributions to 1998 Statewide Candidates by Pro- Deregulation Interests (1997 – February 2000)
Candidate Party Office Contributions Lightfoot, James R Governor $109,756 Vilsack, Tom D Governor $34,670 Oman, David A R Governor $3,790
33 Pate, Paul D R Governor $2,460 McCormick, Mark D Governor $1,745 Branstad, Terry R Governor $500 Governor Total $152,921
Gilliland, John R Secretary of State $7,945 Culver, Chet D Secretary of State $3,890 Miller, Ned D Secretary of State $25 Secretary of State Total $11,860
Brown, Dan R Agriculture Secretary $3,200 Judge, Patty D Agriculture Secretary $2,415 Clause, Reg R Agriculture Secretary $850 Agriculture Secretary Total $6,465
Miller, Tom D Attorney General $2,600 Schwickerath, Mark R Attorney General $25 Attorney General Total $2,625
Johnson, Richard D R Auditor $725 Auditor Total $725
Bolin, Joan Fitzpatrick R Treasurer $350 Treasurer Total $350
Statewide Total $174,946
APPENDIX C: Contributions to 1998 Legislative Candidates by Pro-Deregulation Interests (1997 - February 2000)
House Candidates Party Contributions Siegrist, Brent R $30,599 Corbett, Ron J R $30,425 Rants, Christopher C R $18,450 Sukup, Steve R $9,350 Metcalf, Janet R $8,225 Schrader, David D $7,315 Gipp, Chuck R $7,190 Tyrrell, Phil R $6,850 Van Fossen, James R $6,675 Larson, Chuck R $5,800 Shey, Patrick R $5,500 Jenkins, Willard R $5,230 Boal, Carmine R $5,000
34 Hoffman, Clarence C R $4,815 Millage, David A R $4,095 Arnold, Richard D R $4,025 Dolecheck, Cecil R $3,500 Jacobs, Libby R $3,500 Lord, David G R $3,495 Wise, Philip D $3,425 Hansen, Brad R $3,375 Teig, Russell W R $3,375 Carroll, Danny C R $3,325 Bradley, Clyde R $3,300 Chiodo, Frank D $3,275 Mertz, Dolores M D $3,225 Sunderbruch, John P R $3,200 Adema, Mel R $3,205 Greig, John M R $3,175 Brauns, Barry R $3,100 Hahn, James F R $3,075 Welter, Jerry R $2,950 Greiner, Sandra H R $2,910 Drake, Jack R $2,875 Eddie, Russell R $2,875 Jager, Michael D R $2,875 Thomson, Rosemary R $2,875 Raecker, Scott R $2,625 Boddicker, Daniel R $2,600 Heaton, David E R $2,600 Grundberg, Betty R $2,550 Davis, Galen M R $2,457 Nelson, Beverly J R $2,175 Blodgett, Gary R $2,175 Roberts, Rod R $2,150 Horbach, Lance R $2,144 Sisson, Jeffrey P R $1,925 Barry, Donna M R $1,925 Cormack, Mike R $1,875 Cataldo, Michael D $1,800 Weidman, Dick R $1,650 Rayhons, Henry R $1,635 Baudler, Clel R $1,625 Chapman, Kay D $1,600 Huseman, Dan R $1,525 Collins, Gentry R $1,500 Boggess, Effie Lee R $1,435 Murphy, Pat D $1,425
35 Main, Jerry D R $1,325 Houser, Hubert R $1,325 Bell, Paul A D $1,225 Holmes, Danny J R $1,175 Dinkla, Dwight R $1,150 Myers, Dick D $1,150 Martin, Mona R $1,145 Kettering, Steve R $1,125 Schulte, Lynn R $1,100 Holveck, Jack D $1,075 Warnstadt, Steven H D $1,050 Parker Jr, John P R $990 Dix, Bill R $975 May, Dennis D $925 Klemme, Ralph F R $875 Van Engelenhoven, Jim R $875 Johnson, David J R $825 Thomas, Roger D $725 Huser, Geri D D $700 Obrien, Michael J D $700 Taylor, Todd D $660 Richardson, Steve D $655 Grimes, Carolyn R $650 Anderson, Lon R $650 Batterson, Judy J R $635 Foege, Ro D $615 Osterhaus, Robert J D $600 Connors, John H D $600 Garman, Teresa R $600 Weigel, Keith W D $600 Rogers, Marcia D $550 Frevert, Marcella R D $550 Mundie, Norman D $550 Witt, William G D $550 Churchill, Steven W R $500 Kullander, Richard R $500 Brand, Bill D $425 Alons, Dwayne Arlan R $425 Kuhn, Mark A D $410 Brannan, Rodney D $350 Ford, Wayne D $300 Colbert, David L R $250 Stevens, Greg D $250 Clark, Kenneth M R $225 McElmeel, Sharron L D $225
36 Siegel, Steven J D $225 Jones, James NP $200 Wenndt, Kirk B D $200 Falck, Steve D $200 Scherrman, Paul D $200 Cohoon, Dennis M D $175 Larkin, Rick D $175 Cayouette, Roland G D $150 Eriksen, Paul D $150 Sinnott, Lenee D $150 Woods, Richard R $150 Sill, Rodger R $125 Drees, James D $125 Mascher, Mary D $125 Burnett, Cecelia D $110 Johnson, Paul D R $100 Kinzer, Ron D $100 Rogers, Marcia D $100 Varley, Warren D $100 Racheter, Martha G R $100 McCarthy, Kevin D $100 Tymeson, Jodi R $100 Doderer, Minnette D $75 Dotzler, William A D $75 Arthofer, Scott R $50 Augustine, William (Bill) R $50 Greimann, Jane D $50 Whitead, Wes D $50 Shoultz, Donald L D $50 Kibby, Kelly R $40 Reynolds-Knight, Rebecca D $30 Baughman, Ann-Marie D $25 Berntsen, Rob D $25 Overton, Suellen D $25 Lindsay, Kevin R $25 Jochum, Pam D $25 House Total 304,365
Senate Candidates Iverson Jr, Stewart R $30,675 Kramer, Mary R $17,125 Gronstal, Michael D $14,850 Johnson, Jo Ann R $13,320 Borlaug, Allen R $11,000 Mclaren, Derryl R $6,960
37 Gaskill, Thurman R $6,330 Tinsman, Maggie R $6,220 Sexton, Michael R $4,975 Jensen, John W R $4,950 Lamberti, Jeff R $4,700 Bartz, Merlin R $4,595 Garrels, Richard R $4,550 Lundby, Mary A R $3,950 Schuerer, Neal R $3,714 Deluhery, Patrick D $3,525 Boettger, Nancy R $3,350 Angelo, Jeff R $3,245 Black, Dennis H D $3,135 Mckibben, Larry R $3,080 Hansen, Steven D D $2,940 Miller, David R $2,725 McCoy, Matt D $2,550 Drake, Richard R $2,375 Maddox, Gene R $2,340 Rittmer, Sheldon R $2,200 Flynn, Thomas D $2,150 Freeman, Mary Lou R $2,075 Fraise, Eugene D $1,950 Rehberg, Kitty R $1,700 Redwine, John R $1,500 Judge, John D $1,462 Dvorsky, Robert E D $1,395 Horn, Wally E D $1,375 Hughes, Larry L R $1,260 Veenstra, Kenneth R $1,200 Dearden, Dick L D $1,040 Connolly, Mike D $950 Redfern, Donald R $950 Behn, Jerry R $900 Fink, Bill D $895 Shearer, Mark D $800 Gullion, Dan D $775 Soukup, Betty D $675 Rife, Jack R $650 Black, James R $550 Bolkcom, Joe D $450 Kibbie, John D $350 Rhoads, Bruce R $325 Neill, Claude R $300 Halling, Brent A D $300
38 Hammond, Johnie D $300 Reichardt, Bill J D $300 Szymoniak, Elaine D $250 Hoffmann, Kathleen R $250 Zieman, Lyle R $175 Luiken, Norman A R $100 Louscher, Christine D $75 Whitaker, John R D $40 Halvorson, Rod D $25 Allen Jr, Philip B R $25 Hedge, H Kay R $00 Senate Total $196,896
Legislative Total $501,261
ADVOCATES IN MINNESOTA SPARE NO EXPENSE FOR DEREGULATION PUSH
Minnesota lawmakers have cautiously approached the subject of electric utility deregulation, despite business interest efforts — backed by substantial campaign contributions — to the contrary. During the 1997 legislative session, lawmakers charged their own “Legislative Electric Energy Task Force” to review issues relating to electric utility restructuring and deregulation. And the 20 members of the task force have been taking their charge seriously — wading through the weighty issues of bulk power, distribution, prices, universal service, information disclosure and consumer protection, renewable energy, efficiency, environmental sustainability, unbundled rates, competitive parity and stranded costs.
Legislation to move the state toward deregulation was introduced in both 1999 and 2000. But serious legislative consideration of a full-blown deregulation bill is not expected until 2001 at the earliest, after the task force has finished its work.
In contrast to the methodical approach of state lawmakers, business interests in favor of deregulation are pushing the issue pell mell. Organized under the umbrella of the Coalition for Electric Choice (CEC), “an organization of electricity customers and providers who are committed to bringing competition to the electric power industry in Minnesota,”80 its members include most of Minnesota’s largest industrial and commercial users of electricity and a spate of its most powerful business associations, led by the Minnesota Chamber of Commerce. CEC member groups are sparing no expense to make electric utility deregulation a major concern of state policymakers.
If It Ain’t Broke… In the absence of a public outcry for electric deregulation in a state where electric rates were the 16th lowest in the country,81 employees of CEC member groups and the state’s
39 three investor-owned electric utilities — Northern States Power/Xcel Energy,82 Otter Tail Power and Minnesota Power — opened their checkbooks wide to focus the Legislature’s attention on electric deregulation. Employees of these interests gave $412,765 to candidates and political party committees during the 1996 and 1998 election cycles. Of that amount, $188,548 went directly to candidates, and $224,217 went to the six state- level political party committees and legislative caucuses. These figures are conservative because they do not include untold numbers of contributions of $100 or less to candidates by these employees via conduit funds.83 In addition to their campaign contributions, pro- deregulation interests deployed 129 lobbyists in 2000 to sway the 201 legislators.84
Employees of the CEC member groups and the investor-owned electric utilities seemed to especially want the attention of Republican candidates, who received a total of $104,658, for an average of $2,013 per candidate. In comparison, Democratic candidates received a total of $83,182 for an average of $1,540 per candidate.
Table 1 Contributions by Employees of CEC Member Groups and IOUs (1995-1998)
CEC Groups & IOUs To Party PACs To Candidates Total Cargill (CEC) $75,400 $9,701 $85,101 Dayton Hudson (CEC) $54,075 $17,141 $71,216 Northern States Power $9,710 $36,845 $46,555 Multiple CEC Players (CEC) $13,773 $27,028 $40,801 3M (CEC) $16,310 $21,628 $37,938 MN Power $21,900 $13,549 $35,449 General Mills (CEC) $4,385 $21,775 $26,160 Honeywell (CEC) $6,450 $7,224 $13,674 Reliant Energy/Minnegasco (CEC) $1,350 $8,035 $9,385 MN Retail Merchants (CEC) $3,800 $4,750 $8,550 IBM (CEC) $7,799 $475 $8,274 Edina Realty (CEC) $2,375 $3,375 $5,750 Target (CEC) $1,000 $3,000 $4,000 Utilicorp (CEC) $850 $2,780 $3,630 MN Chamber Of Commerce (CEC) $1,830 $1,525 $3,355 Boise Cascade (CEC) $00 $2,800 $2,800 MN Utility Investors $1,850 $350 $2,200 Cretex (CEC) $00 $1,900 $1,900 Enron Corp.(CEC) $550 $850 $1,400 Otter Tail Power $360 $875 $1,235 MN Service Station Assn (CEC) $450 $700 $1,150 MidAmerican Energy (CEC) $00 $1,000 $1,000 MN School Boards Assn (CEC) $00 $525 $525 North Star Steel (CEC) $00 $347 $347 MN Grocers Assn (CEC) $00 $120 $120
40 TOTAL $224,217 $188,298 $412,515
With this kind of political muscle, deregulation advocates were able to keep the discussion alive in the Legislature. During the 1999 session, House File 1651, introduced by Republican Rep. Ken Wolf, would have required Minnesota’s electric utilities to separately account for costs associated with generation, transmission and distribution — a first step in the move toward a competitive retail marketplace for electricity. However, after failing to find a compromise between electric utilities and environmental groups, Wolf pulled the plug on the bill.85
Similar bills to functionally separate or “unbundle” electric utilities’ rate and cost information were introduced in the House and Senate in 2000. Republican lawmakers were very supportive of the legislation, and House File 2996 was reported out of the House Commerce Committee. However, the Senate version, Senate File 3337, died in the Democratic-controlled Jobs, Energy and Community Development Committee.86
Filling the Party Coffers As in many states, large contributions to political parties and legislative caucuses are an important feature of Minnesota politics. In 1993, the Legislature imposed fairly low limits on contributions to candidates ($100 to $500 in non-election years, and $500 to $2,000 during election years), but failed to put any limits on contributions to political party units. As a result, a significant amount of money in Minnesota politics is now routed through the political parties and legislative caucuses, which in turn can give candidates ten times as much as individuals can.
In total, employees of CEC member groups and the state’s investor-owned electric utilities gave $224, 217 to party PACs and legislative caucuses. The three Republican committees — the Republican Party of Minnesota, the House Republican Campaign Committee and the Senate Republican Election Fund — received 72 percent ($160,867) of that money. In fact, the Republican Party of Minnesota received more than triple the amount given to the Democrat-Farmer-Labor (DFL) State Central Committee.
Table 2 Contributions Received by State Political Party Committees and Legislative Caucuses from Pro-Deregulation Interests – 1995 to 1998
Minnesota Party PAC Contributions Received Republican Party of Minnesota $135,192 DFL State Central Committee $38,250 House Republican Campaign Committee $19,335 DFL House Caucus $17,100 Senate Majority Caucus $8,000 Senate Republican Election Fund $6,340 Total $224,217
41 Of the pro-deregulation interests, Cargill was the largest single contributor to political party committees; individuals associated with the giant agribusiness company contributed $75,400 to the Republican Party of Minnesota. Northern States Power (NSP) was the largest single contributor to legislative and statewide candidates; employees of the investor-owned electric utility company contributed another $36,845 to candidates during the 1996 and 1998 cycles.
The Legislature’s rigorous examination of the issue is especially apt for Minnesota. Much is at stake for the state during the coming debate over electric utility deregulation. Minnesota has a rich, 25-year history of making forward-looking investments in renewable energy and energy efficiency and trend-setting public commitments to preserving the environment and safeguarding public health.87
Will the money contributed by powerful interest groups force electric utility deregulation onto the front burner of the next legislative agenda, as has been the case in so many other states in the region? Time will tell. In the meantime, Minnesotans need to be aware of the rising tide of contributions from vested interest groups.
APPENDIX A: Contributions to Statewide Candidates by Pro-Deregulation Interests (1995 – 1998)
Recipient Party Office Contributions Coleman, Norm R Governor $71,325 Johnson, Douglas J D Governor $27,582 Humphrey Hubert H D Governor $23,716 Weaver, Charlie R Attorney General $19,298 Lillehaug, David D Attorney General $5,050 Freeman, Mike D Governor $4,947 Mondale, Ted D Governor $4,773 Junge, Ember Reichgott D Attorney General $3,050 Hatch, Mike D Attorney General $2,025 Kiffmeyer, Mary R Secretary of State $1,235 Dutcher, Judi R Auditor $800 Larson, Nancy A D Auditor $600 Ventura, Jesse 3rd Governor $458 Garcia, Edwina D Secretary of State $200 Dayton, Mark D Governor $50 Statewide Total $165,109
APPENDIX B: Contributions to Legislative Candidates by Pro-Deregulation Interests (1995 – 1998)
Senate Candidates Party Contributions Robertson, Martha R $1,000 Kelley, Steve D $675 Langseth, Keith D $450
42 Kramer, Don R $400 Kelly, Randy C D $400 Larson, Cal R $400 Wiener, Deanna D $400 Samuelson, Don D $370 Belanger, Bill R $350 Nord, Brad R $300 Olson, Gen R $300 Berg, Charles I $250 Fishbach, Michelle R $250 Johnson, Dave D $250 Morse, Steven D $250 Price, Len D $250 Holmseth, Gregory D $200 Igo, Pat R $200 Sathe, Mark R $200 Cohen, Dick D $200 Hottinger, John C D $200 Pogemiller, Lawrence J D $200 Day, Dick R $150 Dille, Stephen E R $150 Knutson, David L R $150 Lessard, Bob D $150 Terwilliger, Roy R $150 Total to Senate $8,245 Candidates
House Candidates Howes, Larry R $750 Haley, J P (Jack) D $625 Tingelstad, Kathy R $600 Haas, Bill R $550 Hackbarth, Tom R $550 Osthoff, Tom D $500 Wenzel, Stephen G D $450 Hunt, Tim D $425 Delmont, Mike D $400 Knoblach, Jim R $400 Zimmer, Scott R $375 Dehler, Steve R $350 Slawik, Nora D $320 Maggert, Joel R $300 Rifenberg, Michelle R $300 Aakhus, Jeff R $250 Hadley, Mitchell R $250
43 Nelson, Clair D $250 Carruthers, Phil D $250 Dorman, Dan R $250 Greenfield, Lee D $250 Hasskamp, Kris D $250 Johnson, Ruth D $250 Larson, Dan D $250 Pugh, Thomas W D $250 Seifert, Jim R $250 Tunheim, Jim D $250 Rest, Ann H D $249 Trojack, John R $200 Vanegen, Tom R $200 Anderson, Irv D $200 Huntley, Thomas D $200 Jennings, Loren Geo D $200 Juhnke, Al D $200 Long, Dee D $200 Mares, Harry R $200 Milbert, Bob D $200 Storm, Julie R $200 Sviggum, Steve R $200 Commers, Tim R $175 Bakk, Thomas (Tom) D $150 Erhardt, Ron R $150 Krinkie, Philip R $150 Paulsen, Erik R $150 Pelowski Jr, Gene D $150 Rukavina, Tom D $150 Wolf, Ken R $150 Ford, Michele D $125 Folliard, Betty D $125 Graber, Colleen R $100 McCluhan, Rick REF $100 Erickson, Sondra R $100 Fuller, Doug R $100 Koppendrayer, Leroy R $100 Kraus, Ron R $100 Peterson, Doug D $100 Swenson, Howard R $100 Trimble, Steve D $100 Vickerman, Barb R $100 Westfall, Bob R $100 Hafiz, Rob R $50 Lindquist, Todd A R $50
44 Bradley, Fran R $50 Hausman, Alice D $50 Tomassoni, David J D $50 Newton, Jerry D $25 Total to House $15,194
Total to Legislative $23,439 Candidates
WISCONSIN TAKES A DELIBERATE APPROACH TOWARD DEREGULATION
In Wisconsin, the impetus for electric utility deregulation has been much slower in building, as the state has taken a deliberative approach. However, after burrowing beneath the surface for years, the issue of electric deregulation has suddenly emerged from underground in the Badger State in recent months, as the state’s electric utilities have sought to bypass long-standing limits on their investment strategies and profit- taking.
• Wisconsin Energy, which provides 54 percent of the state’s electrical power in the eastern half of the state,88 recently unveiled a $6 billion upgrade of its power system over 10 years that calls for the utility to retain all income from its generation plants.89
• WPS Energy Resources, based in Green Bay, unveiled a plan in October 2000 that would transfer its existing electricity generating assets to a separate, non-regulated subsidiary. The WPS plan calls for “forcing state-based electric utilities to buy from independently owned plants.” WPS wants to build large power plants that would compete head to head with such facilities, known as merchant plants.90
• Alliant Energy Corp. filed a federal lawsuit in early October to challenge state limits on investments by electric utility holding companies and shares purchased in those firms by out-of-state investors.91
• A subsidiary of Alliant, Alliant Energy Resources Inc., has formed a partnership in already-deregulated Illinois with Corn Products International to build a new $415 million power plant near Chicago. Alliant, by operating out of Illinois, is anticipating a return on equity of 15 percent to 20 percent.92
The enthusiasm for deregulation has not extended far beyond the four large investor- owned utilities (IOUs) and major firms hoping to benefit from the potential for lower rates under a new regime of competition. Few ordinary citizens are calling for electric utility deregulation or “retail wheeling” in Wisconsin. Wisconsin’s low electric rates, averaging about 8 cents per kilowatt hour for residential consumers, have reflected a
45 tradition of strict oversight of utility operations and regulation of profits that goes back to the early 1900s.
According to some observers, Wisconsin has sought to avoid the overbuilding of electric utility plants, whose high fixed costs have driven up rates elsewhere. “Wisconsin stands out as perhaps the only model in the nation of holding down rates through the tight regulation of new power plants,” says Steve Hiniker, executive director of the Citizens’ Utility Board. “The utilities were formerly very tightly regulated in terms of building, so they relied on using conservation. As a result of those kinds of decisions, Wisconsin has been able to keep rates low.”93 However, this strategy of limiting overbuilding is now colliding with an increased demand for power. The current situation was neatly summarized in a Nov. 5, 2000, Milwaukee Journal Sentinel article:
“The booming economy, and with it the increased use of computers, has boosted demand to the point where it is beginning to outstrip supply. The state faces two problems: not enough generation and constrained power lines that make it hard to import power from elsewhere.”94
The perceived need for expanded generation and more power lines coincides with the rapidly accelerating push for electric utility deregulation. In Wisconsin, the drive to deregulate has included the formation of coalitions among electric utilities and industrial users, substantial outlays for lobbying, and influence exerted via campaign contributions. All told, those involved in the deregulation debate spent a total of $187,403 in campaign contributions and an additional $1.7 million in lobbying expenses95 trying to sway lawmakers to pass legislation aimed at loosening the regulation of the electric industry.
Reliability, with a Touch of Deregulation In a context of increased worry over the reliability of Wisconsin’s energy supply, legislative action over the past four years focused decidedly on overall reliability, while at the same time restructuring the way energy utilities operate in the state. Lawmakers passed two key bills affecting the operation of electric utilities:
• 1998 Reliability Act: Designed to ensure Wisconsin avoided electric shortages that had plagued the state during the previous two summers, the act required electric utilities to secure additional electric generation while streamlining the approval process for new power plants.96 A leading proponent, Sen. Robert Welch, characterized the bill as “utility deregulation legislation” because it permits the construction of “merchant plants” and affords all power producers access to existing transmission lines. “This plan provides the type of competition which will encourage investment in Wisconsin’s electric utility industry” and “positions Wisconsin’s electrical utilities to compete with surrounding states in a global economy.”97
• R2K (Reliability 2000): Proposed by Gov. Tommy Thompson and passed in October 1999, this provision of Wisconsin’s 1999–2001 budget lifted the asset cap that limited the amount of money electric utility holding companies could invest in non-utility ventures. While lifting the cap would have little direct effect on ratepayers, it would
46 allow electric utilities to make bigger investments and thus reap greater profits, according to a spokesman for Alliant Energy Corp.98 The lifting of that cap was the top legislative priority for Wisconsin Electric and Alliant Energy.99
In exchange for that plum, electric utility companies were required to divest their transmission line assets — about $500 million worth. The state’s power lines would then be owned and operated by a private, non-profit company called Transco. Seen as the first step to breaking the monopoly apart to test for competition, officials from Wisconsin’s electric utilities believed that turning the state’s transmission systems over to an independent company would keep the power system free from manipulation in a coming era of deregulation.100 State fiscal analysts predicted that with Reliability 2000, rates would increase by $41.5 million, or $14 a year, for the average residential ratepayer and by an average of $1.33 a month, or $16 a year, for customers of municipal electric utilities and rural electric cooperatives.101
The passage of Reliability 2000, or “R2K,” hinged on the support of two rival organizations: “Customers First!,” a broad coalition of consumers, public utilities and the state’s smallest investor-owned utility, Madison Gas & Electric; and Energize Wisconsin, a coalition representing the state’s largest gas and electric companies.102 Energize Wisconsin, comprised of Wisconsin Energy, Wicor, Alliant and Wisconsin Public Service Corp., and others,103 was behind R2K because of the provision that loosened the 25 percent asset cap that limited the amount of money utility holding companies can invest in non-utility ventures.
Major electric utilities in Wisconsin gave $85,970 in campaign contributions during the 1998 elections. Almost one-third of those contributions, $26,830, went to the governor, who ensured R2K became part of the 1999-01 budget proposal.
In addition, Energize Wisconsin spent $322,086 in lobbying expenses in 1999, according to reports filed with the state’s Ethics Board. Additional lobbying expenses were incurred by the individual electric utilities, as well.
Table 1 1997-1998 Contributions and 1999-2000 Lobbying Expenses by Wisconsin’s Electric Utilities and Energy Companies
Wisconsin Electric Utilities Contributions Lobbying and Energy Companies Expenses Wisconsin Energy (formerly WEPCO) $46,186 $962,752 Alliant Energy $15,556 $265,593 Wisconsin Public Service Corp. $9,303 $166,158 Northern States Power - Wisconsin $6,425 $297,810 Commonwealth Edison/Unicom $4,500 $67,971 Wisconsin Utilities Association $2,950 $14,923 Enron Corp. $1,050 $15,281 Total $85, 970 $1,790,488
47
Customers First! supported R2K for its set of initiatives on energy conservation, low income assistance, renewable energy, and streamlining of new power line construction.104 Customers First! boasts a statewide base comprised of the Municipal Electric Utilities of Wisconsin (MEUW); the Wisconsin Federation of Cooperatives; Wisconsin Electric Cooperatives Association, representing mainly rural co-ops; Wisconsin Public Power Inc. (WPPI), representing municipal co-ops; Madison Gas & Electric (MG&E), the smallest of the Wisconsin IOUs; the National Federation of Independent Business (NFIB); ratepayer organizations like the Citizens Utility Board (CUB); Wisconsin’s Environmental Decade; American Association of Retired Persons-WI (AARP); and others.105
The campaign contributions from the Customers First! coalition paled in comparison to the electric utilities’ contributions. Customers First! member groups gave a combined total of $15,495, spread thinly among 35 lawmakers. However, Customers First! reported spending $307,600 in 1999 alone on lobbying expenses.
Table 2 Contributions by Customers First! Member Groups (1997-1998)
Customers First! Member Groups Contributions Madison Gas & Electric (MG&E) $5,668 National Federation of Independent Businesses (NFIB) $3,200 Wisconsin Merchants Federation $2,425 Wisconsin Federation of Cooperatives $750 Adams Columbia Electric Cooperative $630 Barron Electric Coop $300 Central Wisconsin Electric Cooperative $250 Trempealeau Electric Cooperative $250 Jackson Electric Cooperative $247 Dairyland Power Cooperative $225 IBEW Local 2304 $200 Wisconsin Public Power Inc. $200 Clark Electric Cooperative $100 Municipal Electric Utilities Association $100 St Croix Co Electric Cooperative $100 Total $15,495
Joining the fray, a coalition of Wisconsin’s major consumers, industrial manufacturers and municipal users formed in May 1999 to protect their interests. Companies that joined the “Wisconsin Initiative Seeking Energy Reform” (WISER) included Quad-Graphics, Briggs & Stratton, Charter Manufacturing Co., Consolidated Papers, Kraft Foods, Kohler Co., Miller Brewing Co., Rayovac, Tombstone Pizza and CUNA Mutual Insurance.106 These large industrial consumers and their employees gave $85,938 during the 1998 elections. Gov. Thompson was the favored recipient among these WISER groups, which
48 gave his campaign 54 percent ($46,310) of their money. In addition, WISER spent $140,460 lobbying on R2K in 1999.
Table 3 Contributions by WISER Groups (1997-1998)
WISER Groups Contributions Miller Brewing $24,275 Godfrey & Kahn $12,120 Briggs & Stratton $8,810 Charter (Steel) Manufacturing $8,800 Oscar Mayer Foods $6,500 Quad-Graphics $6,500 Kohler Co. $5,383 Philip Morris $3,800 Consolidated Papers $3,560 Rayovac $2,500 CUNA Mutual Insurance $1,740 Kraft Foods $1,700 Tombstone Pizza $250 Total $85,938
The Coming Electrical Storm Over the past five years, the broadly shared concern over simply “keeping the lights on” in Wisconsin relegated deregulation to the back burner. However, the climate shifted dramatically in 2000 as IOUs adopted a much more aggressive stance in an accelerated push for deregulation. Rather than letting concerns about the reliability of electrical supply defer their drive for deregulation, the electric utilities are linking the provision of adequate supply to deregulatory action by the state.
While no precise battle lines have yet been drawn over deregulation in Wisconsin, recent developments suggest a feud between big industrial consumers and electric utilities over how utilities can recover “stranded costs,” or past investments, many of which were the result of state regulatory mandates. However, as the forces line up, it becomes clear that those seeking a wide-open form of deregulation have the demonstrated ability to unleash vast campaign contributions and hire scores of lobbyists to influence the debate in their favor.
CONCLUSION
The electric utility industry is undergoing a dramatic overhaul across the country, as utilities and large industrial consumers engage in a full-scale campaign to deregulate the system. Twenty-four states have enacted legislation that allows customers to choose their electricity provider, with 17 of those states currently implementing deregulation. Almost
49 every other state in the country is considering major changes to the way in which it regulates its electric industry.
Those pursuing electric deregulation are utilities and large, industrial consumers, not residential and small business consumers. Advocates contend that vigorous competition will replace government regulation and force improved efficiency and lower prices.
In the Midwest, electric deregulation proponents were able to push the issue onto center stage in most state legislatures. Using generous campaign contributions and extensive lobbying outlays, they were able to achieve this in the absence of any discernible public outcry for change or any critical systemic problem within the industry.
Of the six states studied in this report, Illinois and Michigan have deregulated their electric utility industries. Candidates in these two states were also at the top of the list for the campaign contributions received from those pushing deregulation. The remaining states will be considering major changes in future sessions. While the amount of campaign contributions given by deregulation advocates to candidates in the Midwest is impressive in itself, the research documented in this report soundly demonstrates that the deregulation proponents targeted their contributions to state lawmakers who could — and did — advance their interests. They have been giving generously, to get what they want.
FOOTNOTES
1 The National Institute on Money in State Politics, 1998 data sets. As of December, 2000, the Institute had compiled 1998 data from 37 states. 2 Web site of the National Energy Information Center of the Federal Department of Energy, www.eia.doe.gov/cneaf/electricity/chg_str/regmap.html, July 27, 2000. 3 The National Institute on Money in State Politics, 1998 data sets. 4 Lesley Rogers, “Utilities monopolies may be ending; If deregulation comes, users will have to shop around,” St. Louis Dispatch, February 24, 1997, 1A. 5 Kevin McDermott, “Utility deregulation gets OK in Illinois; Electric companies will cut rates as competition nears,” St. Louis Dispatch, November 16, 1997, C1. 6 Adriana Colindres, “Companies Outline New Rate Plan,” Copley News Service, November 19, 1996, State and Regional sections. 7 Ibid. 8 Paul Swiech, “Utility forms Partnership for Choice; CILCO-led group urges fast choice on electricity,” The Pantagraph, December 12,1996, C1. 9 Bill Bush, “Electric deregulation faces problems; Advocates says current plan won’t fly in Congress,” The State Journal-Register, December 12, 1996, 10. 10 Tom Andreoli, “Edison may bend on dereg; Allies push utility to hasten shift to electricity competition,” Crain’s Chicago Business, March 10, 1997, 1; “H.B. 1998 Electric restructuring bill has broad consumer support,” PR Newswire Association, 3/11/97, Financial News Section. 11 Illinois Manufacturers Association Web site, “Deregulation: 15 things you need to know before the big change,” February 1999 Report, www.ima-net.org. 12 IRMA President David Vite, “The truth of the matter on the retailers’ electric deregulation pilot program,” January 1998, IRMA Newsletter #169. 13 Illinois Campaign for Political Reform Web site, www.ilcampaign.org, “The Power of Money: Campaign Contributions in the Utility Deregulation Battle,” April 22, 1999. 14 Dave McKinney, “Philip rips ComEd deregulation plan,” Chicago Sun-Times, May 20, 1997, News, 8. 15 Cam Simpson, “Sparks fly at hearing on deregulation,” Chigago Sun-Times, October 10, 1997, Fin, 61. 16 Adriana Colindres, “Utility companies hold fast to positions on deregulation,” Copley News Service, October 16, 1997, State and Regional sections. 17 Dave McKinney, “Senate proposal would mean 20 percent cut in ComEd bills,” Chicago Sun-Times, October 29, 1997, 10. 18 Bill Bush, “Electric deregulation bill wins overwhelming OK,” The State Journal-Register, November 15, 1997, 1. 19 Bill Bush, “Philip backing deregulation bill,” The State Journal-Register, October 29, 1997, 8. 20 Bill Bush, “Electric deregulation bill wins overwhelming OK,” The State Journal-Register, November 15, 1997, 1. 21 “Illinois Gov. Edgar signs dereg bill as utilities agree to asset sale today,” The Energy Report, December 22, 1997, Vol. 25, No. 50.
50 22 Mike Comerford, “Business groups look for benefits of state electric deregulation bill,” Chicago Daily Herald, November 1, 1997, Business, 1. 23 “Illinois Gov. Edgar signs dereg bill as utilities agree to asset sale today,” The Energy Report, December 22, 1997, Vol. 25, No.50. 24 Richard Mathias, “Report of chairman’s fall 2000 roundtable discussions re: implementation of the electric service customer choice and rate relief law of 1997,” Illinois Commerce Commission, October 20, 2000. 25 Adrianna Colindres, “Illinois unlikely to face power outages; deregulation should go well in state,” The State Journal-Register, August 8, 2000, Business, 21. 26 Kathy Barks Hoffman, “Utility deregulation a highly charged dance thereafter,” Associated Press, May 14, 2000, State and Regional section. 27 Ibid. 28 Kathy Barks Hoffman, “Governor introduces own plan for electric, phone deregulation,” Associated Press, May 3, 2000, Business News. 29 Kathy Barks Hoffman, “Supreme Court ruling muddies water on electric deregulation,” Associated Press, June 29, 1999, State and Regional News. 30 Amy Lane, “New electric deregulation bills move to House this week,” Crains Detroit Business, May 29, 2000, 28. 31 Brenda Rios, “Hurdles remain in battle to bring competition to Michigan electricity market,” Detroit Free Press, May 23, 2000. 32 Amy Lane, “New electric deregulation bills move to House this week,” Crains Detroit Business, May 29, 2000, 28. 33 Dee Ann Durbin, “Senate passes electrical competition bill,” Associated Press, May 23, 2000, Business News State and Regional. 34 Bill Beck, “Behind the Power Curve?,” Indiana Business Magazine, August 1, 2000, No. 8, Vol. 44, 10. 35 Cam Simpson, “Utility, phone firms stoke regulatory debate; Deregulation will top 1997 agenda at statehouse, but consumer interests may get lost in the battle,” The Indianapolis Star, January 5, 1997, EO1. 36 Jenny Labalme, “Opponents, supporters paint different pictures of utility deregulation bill,” The Indianapolis Star, February 15, 1995, Business, FO2. 37 Ibid. 38 “Bill loosening utility ‘earnings test’ advances in the Indiana Legislature,” Electric Utility Week, February 20, 1995, Rates and Regulation, 13. 39 Katie Culbertson, “Electric competition talks heat up; Industry groups say Indiana is falling behind,” Indianapolis Business Journal, December 15, 1997. 40 Cam Simpson, “Key backer pulls plug on utility bill, State Sen. Morris declines to seek vote on complex plan to deregulate electric utilities,” The Indianapolis Star, February 21, 1997, Business, E1; and Susan Dillman, “Bill allowing utility choice unveiled in Indy,” South Bend Tribune, January 17, 1997, C1. 41 Cam Simpson, “Key backer pulls plug on utility bill, State Sen. Morris declines to seek vote on complex plan to deregulate electric utilities,” The Indianapolis Star, February 21, 1997, Business, E1. 42 Russ Pulliam, “More charge for your buck?,” The Indianapolis News, June 18, 1997, A08. 43 Susan Dillman, “Bill allowing utility choice unveiled in Indy,” South Bend Tribune, January 17, 1997, C1. 44 Cam Simpson, “Utility, phone firms stoke regulatory debate; Deregulation will top 1997 agenda at statehouse, but consumer interests may get lost in the battle,” The Indianapolis Star, January 5, 1997, EO1. 45 Scott Olson, “Dereg bill has but a glimmer of hope; Other issues top session agenda,” Indianapolis Business Journal, October 2, 2000. 46 Cam Simpson, “Key backer pulls plug on utility bill, State Sen. Morris declines to seek vote on complex plan to deregulate electric utilities,” The Indianapolis Star, February 21, 1997, Business, E1. 47 Katie Culbertson, “Electric competition talks heat up; Industry groups say Indiana is falling behind,” Indianapolis Business Journal,December 15, 1997, Vol. 18, No. 40, 3. 48 Ibid. 49 Doug Sword, “Utility deregulation bill OK’d, but as a shadow of its former self,” The Indianapolis Star, February 3, 1998, City/State, BO2. 50 Doug Sword, “Labor muscle helps defeat utility reform bill in Senate,” The Indianapolis Star, February 5, 1998, CO1. 51 Doug Sword, “No major bills likely to tie up session,” The Indianapolis Star, January 1, 1998, C10. 52 Doug Sword, “Utility plan would open markets on limited basis; Senate chairman wants to establish pilot programs in order to test deregulation,” The Indianapolis Star, February 16, 1999, CO8. 53 State of Indiana Web site, www.state.in.us/legislative/archives.html, December 15, 2000. 54 Doug Sword, “Utility plan would open markets on limited basis; Senate chairman wants to establish pilot programs in order to test deregulation,” The Indianapolis Star, February 16, 1999, CO8. 55 Stuart A. Hirsch, “Lawmakers postpone debate on electricity deregulation,” The Indianapolis Star, February 16, 1999, AO1. 56 Ibid. 57 Ibid. 58 Scott Olson, “Dereg bill has but a glimmer of hope; Other issues top session agenda,” Indianapolis Business Journal, October 2, 2000. 59 Russ Pulliam, “More charge for your buck?,” The Indianapolis News, June 18, 1997, A08. 60 Jeff Zeleny, “Electric deregulation bill dims,” The Des Moines Register, March 13, 1999, 6. 61 Chris Clayton, “Electricity measure shorts out. Backers blame politics for a lack of support on a bill to deregulate the Iowa industry,” Omaha World Herald, April 21, 2000, 1. 62 Jeff Zeleny and John McCormick, “Money Keeps Charging Electric Industry Issue,” Des Moines Register, April 12, 2000. 63 Chris Clayton, “Electricity measure shorts out. Backers blame politics for a lack of support on a bill to deregulate the Iowa industry,” Omaha World Herald, April 21, 2000, 1. 64 Joe Murphy and Dave Habr, “Electric deregulation and the prices paid by Iowa customers: Iowa average electric prices and baseload generation costs in 1998,” Department of Justice’s Office of Consumer Advocate, January 2000. 65 John McCormick, “Money keeps charging electric industry issue; Hundreds of thousands of dollars push for deregulation,” The Des Moines Register, April 12, 2000, 1.
51 66 Iowans for Electric Choice, Letter to Legislators, March 31, 2000. 67 Joe Murphy and Dave Habr, “Electric deregulation and the prices paid by Iowa customers; Iowa average electric prices and baseload generation costs in 1998,” Department of Justice’s Office of Consumer Advocate, January 2000. 68 Gary D. Stewart, “The high consumer risk of electric deregulation,” Department of Justice’s Office of Consumer Advocate, March 8,2000. 69 Brenda Fullick, “Live Wires,” City View, March 3, 2000. 70 Lobbying totals based on compilations of Iowa General Assembly lobbyist client reports filed by IEC members covering the period from January 1, 1999 - June 30, 2000. 71 Lobbyists registered with the Senate and House of Representatives, 78th General Assembly, 2000 Session, Secretary of the Senate and Chief Clerk of the House, May 10, 2000. 72 Homepage of the Iowa Association of Business & Industry’s Web site, www.iowaabi.org/ November 16, 2000. 73 John McCormick, “Money keeps charging electric industry issue; Hundreds of thousands of dollars push for deregulation,” The Des Moines Register, April 12, 2000, 1. 74 John McCormick, “To the winner, a windfall. Groups that snubbed Vilsack’s campaign hop on bandwagon,” The Des Moines Register, January 30, 1999, 1; and Staff, “Contributions before and after the election,” The Des Moines Register, January 14, 1999, 6. 75 Jeff Zeleny, “Electric deregulation bill dims,” The Des Moines Register, March 13, 1999, 6. 76 Ibid. 77 Jonathan Roos, “Utility would build plants if bill passes; MidAmerican offers two new plants, but critics cite timing,” The Des Moines Register, April 13, 2000, 1. 78 William Petroski, “Deregulation put on back burner,” The Des Moines Register, August 13, 2000. 79 Ibid. 80 Minnesota’s Chamber of Commerce Web site, www.mnchamber.com, June 2000. 81 Scott Carlson, “Minnesota Commerce Department Rejects Plan to Restructure Electric Industry,” St. Paul Pioneer Press, September 7, 2000. 82 Minneapolis-based Northern States Power merged with Denver-based New Century Energies to become Xcel Energy 83 Minnesota law (Statutes, section 211B.15, subd. 16) allows employees of business firms to contribute to candidates via conduit funds administered by their employers. If an employee gives more than $100 to a candidate through a conduit fund in a calendar year, the candidate must report the employee’s name, address and employer. If, however, employees give $100 or less to a candidate through a conduit fund, these contributions are simply reported as part of the Small Unitemized Contributions line item on the candidate’s report. 84 Minnesota Campaign Finance Board’s Web page, www.cfboard.state.mn.us/lobby/index.html 85 Scott Carlson, “Legislative Notebook,” Saint Paul Pioneer Press, March 20, 1999. 86 Minnesota State Web site, www.revisor.leg.state.mn.us. July 5, 2000. 87 Testimony by Environmental Coalition to Minnesota’s Legislative Electric Energy Task Force, September 30, 1999. 88 Lee Hawkins Jr. and Lee Bergquist, “Wisconsin Energy flexes political muscle with plan: Lobbying efforts aimed at lifting controls, convincing lawmakers it will work,” Milwaukee Journal Sentinel, September 17, 2000, 01D. 89 Lee Hawkins Jr., “Wisconsin Energy plans radical $6 billion makeover; It would slash dividend, add plants, rates may rise,” Milwaukee Journal Sentinel, September 11, 2000, 01A. 90 Lee Hawkins Jr., “WPS offers own plan for power deregulation; Utility proposal includes letting market set prices,” Milwaukee Journal Sentinel, Oct. 18, 2000, 1D. 91 Lee Hawkins Jr., “Alliant Energy sues state on utility investment rules,” Milwaukee Journal Sentinel, Oct. 12, 2000, 01D. 92 Lee Hawkins Jr., “Alliant unit forms power partnership; Companies to build cogeneration plant in Illinois,” Milwaukee Journal Sentinel, June 6, 2000, Business, 01D. 93 Interview, August 1999. 94 Lee Hawkins Jr., “Questions of size, power, still dog utility,” Milwaukee Journal Sentinel, Nov. 5, 2000, Business, 01D. 95 Sarah Wyatt, “Energy groups lobbied hard on governor’s Reliability 2000 plan,” Associated Press, August 5, 1999, State and Regional. 96 Mike Ivey, “Energy bill breaks new ground but with a cost,” Capital Times, June 3, 1999, 1E. 97 News release by Sen. Robert Welch, April 20, 1998. 98 Jenny Price, “Electric bills would be bigger under Reliability 2000,” Associated Press, October 20, 1999, State and Regional. 99 Mike Ivey, “Energy bill breaks new ground but with a cost,” Capital Times, June 3, 1999, 1E. 100 Lee Hawkins Jr., “Policy shifts to meet energy needs lauded; Lobbyists, utility executive at forum applaud efforts to lift 25 percent investment cap,” Milwaukee Journal Sentinel, July 15, 1999, Business, 2. 101 “Reliability 2000 Highlights,” Associated Press, October 21, 1999, State and Regional. 102 Mike Ivey, “Energy bill breaks new ground but with a cost,” Capital Times, June 3, 1999, 1E. 103 Lee Burgquist, “Alliant says it might have to sell state utility business. Power Company close to exceeding 25 percent limit on outside investments,” Milwaukee Journal Sentinel, May 12, 1999, Business, 1; Mike Ivey, “Big utilities seek unrestricted expansion,” Capital Times, April 14, 1999, Business, 6A. 104 Mike Ivey, “Energy bill breaks new ground but with a cost,” Capital Times, June 3, 1999, 1E. 105 Customers First! Web site, www.customersfirst.org/members.shtml, November 9, 2000. 106 Lee Bergquist, “State firms to lobby for utility deregulation,” Milwaukee Journal Sentinel, May 20, 1999, Business Section, 1.
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