The New Republic: September 19, 2019

How Energy Companies Corrupt State Politics

By Meaghan Winter, The New Republic

In 2017, a coalition of Democratic activists and party leaders led a “Blue Wave” in Virginia, flipping 15 Republican-held House seats and becoming a vessel of hope for Democrats nationwide. This year, every seat in the Virginia House of Delegates is an open race, and Democrats have a shot at taking control of the state Senate. In doing so, they would have a chance not just to weigh in on a redistricting process that could establish partisan political advantage for the next decade, but also to make serious strides on an issue they’ve repeatedly been frustrated on at the national level: climate change.

Energy policy is often thought of as a national issue, rather than a state one. But because states partially regulate energy companies, climate activists have zeroed in on state governments as venues where they must make reforms soon. The complicating factor is the amount of money energy companies spend on state politics.

For years, across the country, cash-strapped state Democratic parties have felt they needed companies like Dominion Energy, which serves Virginia, West Virginia, and the Carolinas as well as Utah, Ohio, Idaho, and Wyoming. Virginia’s Democratic Minority Leader Dick Saslaw sits on a committee responsible for evaluating energy-related bills and has accepted at least $363,000 from Dominion during his tenure as an elected official. Now, as Democratic parties try to rebuild themselves and regain lost ground, new leaders and candidates are trying to find ways to reconcile their need for huge sums of cash to compete in ever-more expensive elections with a growing demand to cut ties with corporate patrons. In Virginia, the fissure is exemplified by candidates’ stances towards Dominion, which has influenced, if not set, the state’s energy policy for decades.

In 2017, the Virginia gubernatorial Democratic primary candidates were Ralph Northam, who to date has received at least $206,751 from Dominion Energy, and former Congressman Tom Perriello, who loudly refused Dominion donations and made opposing their influence one of the central issues of his campaign. That year the group Activate Virginia circulated a pledge asking candidates not to accept Dominion money. Debra Rodman, an associate professor of anthropology at Randolph Macon who was running for House District 73, was among the assembly candidates who campaigned on her promise to reject Dominion money.* “I was informed by my voters, honestly,” Rodman said. “It’s not just about energy but taking a strong stance on campaign finance reform.” She believes that the new candidates who declined Dominion money were willing to do so because they were “all regular working people who understand what living day-to-day is like. I think we really came into this becoming elected officials with a perspective of wanting to represent the people.”

Perriello lost the primary to Northam, who a year later became notorious for having appeared in his medical school yearbook in blackface. But in the November general election for the Virginia House, Rodman won—beating a 17-year Republican incumbent in a district that hadn’t been represented by a Democrat in over thirty years. Twelve other Democrats who had taken the pledge not to accept Dominion dollars won their races, too. Now, just two years later, the math is different. At least 61 candidates for state office in Virginia have pledged not to accept money from Dominion Energy.

A new political outfit, Clean Virginia, is spending at least $1 million to fund those candidates. The initiative began after the 2017 election, when Brennan Gilmore, Perriello’s chief of campaign staff, met with Michael Bills, a long-time Democratic political donor. Bills recognized the importance of winning state legislative seats as a means of reforming Virginia’s campaign finance system and redistricting process, and decided to fund the initiative. Clean Virginia is currently giving House of Delegates candidates $2,500 per cycle and Senate $5,000 per year, if they refuse to accept Dominion donations. “That doesn’t sound like a lot,” Gilmore acknowledged. “But at the state level, you can do a lot with a little.” He points out that Republican operatives “weren’t pouring tons of money into [districts] to flip them” when they designed their successful plan to remake state legislatures ahead of redistricting in 2010. Clean Virginia is technically bipartisan. “I will write a check to a Republican today,” Gilmore told me. But Republican candidates have thus far not sought out the funds. Gilmore speculates that they may want to avoid association with Bills, who is a prominent Democratic mega-donor.

The activism around Dominion’s influence in Richmond has already changed the rules of engagement for Democratic candidates. Not having Dominion donations means “you have to commit yourself to grassroots support and organizing, and in some ways that’s harder. It requires more effort,” said Phil Hernandez, who worked in the Obama administration’s Office of Energy and Climate Change Policy and is now running for House District 100. “But I think that’s just the right way to do it.” That position represents a sea change. “Our work that we started in 2017 now has set a precedent,” Rodman said. “If you’re running in Virginia at this point, if you’re a Democrat, you almost have to take this pledge.”

To understand what a coup that is, it’s important to understand how energy companies across the United States have, over the decades, maintained tremendous political influence among the state officials who are supposed to regulate them. In Virginia, as elsewhere, both Democratic and Republican state lawmakers allied with energy companies have written laws and appointed regulators who have loosened emissions standards, allowed gas pipelines and exploratory fracking, and guaranteed energy companies high rates of return. Utility companies’ transactional political maneuvers are especially suspect because of their outsize influence on the economy and climate change, and their special status as government-regulated monopolies.

Back when the electricity grid was first built, the federal government decided to allow utility companies to operate as monopolies within their regions under the condition that they would adhere to guidelines put in place by local government commissions. Today, those commissions are “a very dark corner of state government, which most Americans don’t know about,” said David Pomerantz, executive director of the Energy and Policy Institute, a watchdog group for the energy industry. The utility companies “thrive on that [obscurity] because it means they’re able to manipulate the commission without very many people watching.” The commissions operate under different rules in different states, and in some cases their members are elected, but the general outline of their duties is roughly the same: they set emissions standards and the rates that customers pay for electricity. Because electricity is the backbone of modern life and the economy, those rates affect every other cost Americans have, while emissions standards have direct bearing on a state’s contribution to climate change.

Brennan Gilmore, a former U.S. Foreign Service officer, is heading the Clean Virginia advocacy group, created to fight “monopoly utility corruption in Virginia politics.”Jim Watson/AFP/Getty Images

Currying favor with state officials has long been a cornerstone of utility companies’ business strategy, in Virginia and other states. In thirty-eight states, the governor appoints members of the state commission tasked with regulating energy companies. That incentivizes energy companies to fund their campaigns. In Florida, for example, utility companies gave over $1 million to then-Governor Rick Scott and PACs working to re-elect him—during just one election year. In Virginia, because the legislature appoints the commission, Dominion has historically given consistent donations to the members of the legislative committees that appoint commissioners and evaluate energy-related bills. Clean energy advocates argue that the millions of dollars that utility companies spend on state political races are relatively modest investments considering the billions that favorable regulation delivers those companies and their shareholders. For example, states guarantee utility companies a steady return on the physical assets that they own, which partially explains why utilities are always eager to build more plants and pipelines. In Dominion Energy’s case, Virginia guarantees the company a 9.2 percent return on equity, and the company has asked that the state commission raise that to 10.75 percent, to subsidize its new gas pipelines, which will cost billions.

In recent years, with the emergence of alternative forms of energy, utility companies have had more incentive to buy favor on the state level—and some of them have made brazen attempts to squash perceived threats to their monopoly from third-party solar companies and other forms of clean energy. Energy industry political groups have formed advocacy groups with names like Consumers for Smart Solar—an innocuous-sounding group that drew intense scrutiny in 2016 when the Miami Herald procured a recording of a utility company-supported think tank director detailing how the industry aims to “use the language of promoting solar” to actually defeat initiatives that would allow for more renewable energy. At the time, utility companies were backing an amendment in Florida whose “goal,” they claimed “was to expand solar generation,” but which the Herald reported could have served “as a legal barrier to raise fees on solar users and keep out companies that want to compete with the utilities to provide solar energy generation.”

More specifically in the Virginia case, as a top political donor, “Dominion essentially is the gatekeeper when it comes to state-level energy policy,” Gilmore argues. Their influence plays out in multiple ways. First, leadership in the Virginia assembly has consistently killed bills—like those incentivizing renewable energy or requiring new emissions standards—that could threaten Dominion’s monopoly status. “It’s not just what the legislature has done on Dominion’s behalf but what it has failed to do,” Pomerantz told me. Unlike in many other states, in Virginia energy companies are not required to meet any renewable energy goal. Virginia is currently ranked 37th in terms of renewable energy production, despite advocates saying the state is particularly well-positioned for solar, hydro and wind power. Instead, as climate scientists urge than we have less than a decade to dramatically reduce carbon emissions to avoid catastrophe, Dominion plans to lower its carbon emissions at a rate of roughly 1 percent per year between now and 2030—a slower rate than it decarbonized between 2005 and 2017, according to the Energy and Policy Institute. That unhurried pace fits an alarming national pattern. Data culled from the U.S. Energy Information Administration shows that carbon emissions from the U.S. energy sector increased by 1.9 percent from 2017 to 2018, largely because energy companies expanded their natural gas projects.

Dominion is among those lobbying for more gas drilling. The company is awaiting permission to build the Atlantic Coast Pipeline (ACP), a 600-mile gas pipeline that would run underground in Virginia, West Virginia, and North Carolina. Construction on the pipeline is currently suspended as lawsuits wind through the courts, and the project has met with strong local opposition, including from Native American groups who object to the pipeline running through ancestral land and burial grounds. As with other pipeline debates, the ACP’s planned route has raised environmental justice concerns from those who believe utility company money is being valued above the concerns of voters with less to give: “I do believe that this location was selected because we are African Americans,” one Union Hill resident told Energy News Network in August.

This legislative session, Virginia Delegate Lee Ware, a Republican representing the 65th District, sponsored a bill that would have required Dominion to demonstrate that they would not be passing the costs of such building projects on to their electricity customers. The ACP is projected to cost $7 billion. The Virginia Senate committee that ultimately killed Ware’s bill was led by Senator Frank Wagner, who has received $114,485 from Dominion Energy. Wagner also chaired the committee that appointed the newest member of the commission responsible for regulating Dominion.

Such conflicts of interest are not outliers. If anything, clean energy advocates cite Ware’s bill as atypical because it advanced at all. Energy companies shape state energy policy by giving money but also by wielding expertise: Establishing electricity rates and carbon standards involves technical minutia, and state lawmakers are rarely elected with granular knowledge about energy policy. Each legislative session, those lawmakers have to consider hundreds of bills on wide-ranging topics from Medicaid to highway repairs, so they often rely on lobbyists to break down information. Dominion deploys a fleet of lobbyists at the national level, in Washington, and at the state level, in Richmond, and in other state capitals. To fill the gap in information about energy policy that doesn’t come directly from within the industry, Clean Virginia has started a research arm which will aim to inform lawmakers.

Clean Virginia has also joined a statewide coalition, Virginia Energy Reform Coalition, that includes strange bedfellows, including Freedom Works, the conservative and libertarian advocacy group. True believers in the free market have good reason to oppose the current government-regulated energy model, which breeds inefficiencies by protecting individual companies’ artificial monopolies. And many potential ways to address the climate crisis fall in line with traditional Republican economic values. Hernandez says that during his tenure in the Obama administration Republican governors often supported their renewable energy efforts because they brought jobs to their states. State lawmakers squashing bills that would promote clean energy is “anti-business, anti-jobs,” Hernandez says, because they prohibited new energy industries from proliferating in the state. He echoed an idea shared by many others calling for energy policy reform: “This shouldn’t be partisan.”

The ramifications for lawmakers failing to rein in Dominion and other monopoly utilities—across the country and over decades—are manifold. It is difficult to move through an ordinary day while also holding in mind what rising temperatures mean on a global scale. Virginians are already feeling the economic consequences of the climate crisis. Hernandez’s district is on the Virginia coast, where the sea level is rising faster than anywhere else on the east coast. Increasing costs of flood insurance are already a concern for people he has met while knocking on doors. “This is a pocketbook issue for families,” he said. Dominion’s influence also extends beyond the climate crisis. Virginia’s State Corporation Commission found that in 2018 Dominion earned $277.3 million more than allowed by the rate set by the state. But a law Dominion lobbied for prohibits customers from being reimbursed. And according to Clean Virginia, Dominion’s new capital spending will increase customers’ bills by nearly $400 per year.* “There are people being evicted in Virginia, which has one of the highest eviction rates in the country in certain of our communities, for failure to meet their utility bills,” Gilmore said.

The ripple effects of corporate donors like Dominion steering legislative agendas also have far-ranging consequences for other political battles. Massive political spending by utility companies has kept incumbent Republicans and conservative Democrats in charge in statehouses across the country. For years that has meant not only regressive environmental policies but also no Medicaid expansion, no gun reform, no increases in education spending, and more. The incumbents’ control over election districts then perpetuated these trends. This November, Clean Virginia’s supporters say, could be the moment that signals what will be possible in the state, and for campaign finance and climate change activists nationwide. Virginia has “tremendous potential” if the right changes are made, Hernandez told me. “I would be so proud if in the coming years we could emerge as a center of excellence for resilience and clean energy. It will take work to get there, but I can see that future.”

* This article misstated Rodman’s teaching position, and has been updated to clarify the reason for a predicted increase in Dominion customers’ bills.