Duke Energy spends big on Republicans, “soft money” groups in 2020 election

Key Points:

• Duke Energy contributed handily to North Carolina Republicans, incumbents, and loyal utility allies in the state’s high-stakes 2020 General Assembly elections. 
• The company gave extensively to 527 “soft money” organizations this campaign cycle – almost $2.4 million through June. These funds disproportionately boosted Republican-affiliated groups, especially in Florida and Indiana. The utility funneled half a million dollars to a new North Carolina 527 created by former Duke employees.
• Duke’s PAC contributions at the federal level, as well as those of the company’s top executives, favored Republicans by a significant margin, including embattled Senator Thom Tillis (R-NC).

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Duke political strategy in North Carolina bets on Republicans, incumbents, utility loyalists

With significant climate action potentially hanging in the balance, the monopoly utility Duke Energy is spending mostly on Republicans in North Carolina’s state-level elections this week. 

At stake is control of the state’s General Assembly, which Democrats would assume if they flip six seats in the House and five in the Senate this election. Governor Roy Cooper (D) – who is favored to win re-election this month – has championed a state Clean Energy Plan to reduce power sector greenhouse gas emissions 70% by 2030 compared to 2005 levels, and carbon neutrality by 2050. But realizing its implementation would require legislative action to make policy changes beyond the Governor’s purview. A similar change in control of Virginia’s General Assembly last year led to the passage of the Virginia Clean Economy Act in the next legislative session, requiring the state’s main electric utilities to achieve a zero-carbon grid by 2050.

That means the election results could have big stakes for Duke. Overall, Duke’s PAC giving in state races this cycle is roughly consistent with that in the previous two. Ahead of 2020 races, the utility PAC has given almost $480,000, as of campaign finance records filed on October 20. The PAC may have spent more in the final days before the election. In 2018, that number was approximately $445,000. In 2016, it was $550,000, but in addition to the Duke Energy Corporation PAC, a Duke Energy Piedmont Natural Gas Company PAC operated for part of the cycle following the merger of those two companies, but before the latter PAC’s closure.

Duke’s PAC is the second-highest contributing corporate PAC to North Carolina General Assembly candidates this year, according to a campaign finance analysis from Long Leaf Pine Slate, a group seeking to boost fundraising for Democratic challengers to flip the state legislature, and as first reported by the Energy News Network.

Under North Carolina law, corporations cannot contribute directly to candidates, their committees, or PACs. Duke’s PAC entities – the Duke Energy Corporation PAC, and before its closure in 2017, the Duke Energy Piedmont Natural Gas Company PAC – can donate to these entities. While a separate legal entity from the Duke Energy Corporation, Duke’s PAC is managed primarily by multi-decade employees of the company who lead or work in construction and commissioning, human resources, legal functions, and as a “grassroots manager.” PAC Chairman Joe Kluttz has been employed by Duke for 40 years, according to his LinkedIn profile. The company’s political participation policy “strongly supports individual participation in the political process in our communities, including […] participation by eligible employees in Duke Energy’s political action committee.”

Duke’s PAC has given significantly more to North Carolina Republicans and committees than to Democrats in each of the past three election cycles. For the 2020 cycle to date, its ratio of contributions to Republicans versus Democrats has been roughly 3:1. In the 2018 and 2016 cycles, those numbers were between 3:1 and 4:1. Duke did give to some of the House Democratic leadership, including $3,000 to House Minority Leader Darren Jackson (D-39), who is running unopposed, as well as $5,400 to Gov. Cooper.

Betting heavily on Republicans, especially embattled incumbents, may present a strategic risk for Duke in the event that Democrats perform well this week. Dominion Energy hedged its overall contributions to Virginia lawmakers across party lines last year, but doubled down on Republican incumbents in key battleground races. Five of the seven swing contests in which Dominion and its executives spent the most flipped to Democratic control.

Duke’s PAC is supporting almost exclusively incumbent candidates in North Carolina this election cycle; of the few notable exceptions where Duke is supporting challengers, all are Republicans. The utility PAC supported former state Senators Michael Lee (R-9) and Wesley Meredith (R-19) during their Republican primaries to recapture their old districts against Democratic incumbents, match-ups that could decide party control of the chamber. (Both Democrats – Harper Peterson and Kirk deViere, respectively – voted against a bill for which Duke lobbied heavily, Senate Bill 559, discussed further below.) 

Two other Duke-supported candidates are vying for seats left open by retiring Republicans: Amy Galey in Senate District 24, to whom Duke contributed during the general, and Charles Miller in House District 19, to whom Duke donated during the primary. Finally, former Senator Andy Wells (R-42) ran unsuccessfully in the Republican primary for Lt. Governor. Galey received $2,000 from Duke’s PAC; all four others received $5,400.

The utility has also favored Republicans in potential battleground legislative races this cycle. Duke’s PAC gave to candidates in 11 such races, 10 of whom were Republicans. Seven in this group were incumbents (including the lone Democrat), two were challengers, and two were running in races for open seats, but where the retiring legislator was also a Republican. Five of Duke’s battleground recipients received money from Duke’s PAC in both the primary and general elections, four in just the primary, and two in just the general.

Duke Energy PAC contributions in potential NC battleground races, 2019-2020

Source: NC State Board of Elections data, 2019-2020

As Elizabeth Ouzts reported for Energy News Network last week, Duke’s PAC giving to state legislators this cycle appears to align with how those legislators’ voted on a multi-year ratemaking bill the utility advanced last year, and which could have resulted in millions in over-earnings for the company at ratepayers’ expense.

Representative Larry Strickland (R-28) altered that bill, SB 559, with a successful House amendment to instead study the multi-year ratemaking proposal alongside other potential rate reform tools. Strickland was shut out by Duke’s PAC this cycle, after having received $2,000 for his 2018 re-election bid.

Key supporters of the original legislation, including Speaker of the House Tim Moore (R-111), Senate President Pro Tempore Phil Berger (R-30), House Majority Leader John Bell (R-10), Senate Minority Leader Dan Blue (D-14), Senior Chair of the House Appropriations Committee Jason Saine (R-97), and Senator Bill Rabon (R-8) each received $16,000 in contributions from Duke’s PAC this election cycle – more than any of them received in their 2018 re-election bids. None had primary races this year, and none are running in tight general elections.

Others in closer races who acted against Duke’s interests on SB 559 also did not receive the utility’s support this cycle. Chair of the House Energy and Public Utilities Committee John Szoka (R-45) and Representative Ted Davis (R-19) each supported Strickland’s amendment. Szoka received $9,700 from Duke’s PAC during the 2018 cycle, and Davis $4,000.

Duke pours additional $500,000 into North Carolina races through new 527 group

As Ouzts first reported in March and April, Duke Energy Carolinas wrote checks for half a million dollars to a new IRS Section 527 group – Citizens for a Responsible Energy Future (CREF) – formed by Duke Energy alumni, which poured money into ads and mailers ahead of the state’s March primary.

The group’s President and Treasurer, Tony Almeida and Scott Gardner, are former long-running employees of the company. Almeida was a Duke Energy Vice President before serving as a Senior Advisor to former North Carolina Governor Pat McCrory. Gardner’s terminal role at Duke was as Regional Director for State Government Affairs, according to his LinkedIn profile. Almeida and Gardner created CREF at the end of January.

527 organizations can raise and spend an unlimited amount of money from individuals, corporations, or unions to promote candidates, as long as they do not “expressly advocate”  for or against a candidate or coordinate with the candidate’s campaign.

CREF paid for TV ads in the competitive primary races of at least two state legislators: incumbent Representative Elmer Floyd (D-42), and Representative Steven Jarvis (R-80), who challenged Senator Eddie Gallimore (R-29). Floyd voted against the Strickland amendment to SB 559; Gallimore initially opposed Duke’s original bill, though supported it in a later vote. Both ads described the promoted candidate as voting “to keep power bills low.”

Charles Miller, the Republican nominee for House District 19, also received support from Citizens for a Responsible Energy Future in the form of mailers. Miller’s opponent, David Perry, filed a complaint against CREF following his defeat in the primary, the Port City Daily first reported this March. Miller had previously worked for Duke (then Progress Energy) as a Nuclear Security Specialist, the mailers say.

Citizens for a Responsible Energy Future mailer promoting Charlie Miller, the Republican nominee for NC House District 19. Source: Port City Daily

CREF’s IRS reports show that the group spent almost all of the money it had received from Duke, its sole disclosed funder, by March 4, the day after North Carolina’s primary, including hundreds of thousands of dollars on TV ads and mailers. The beneficiaries of most of that spending are not known; airtime for the ads promoting Floyd and Jarvis accounted for only $40,000. (A 2018 change to state law narrowed the definition of communications deemed “electioneering,” and for which disclosure is mandated, significantly.)

CREF reported only bank and legal fees in its third quarter IRS filings; Duke does not appear to have contributed to the group since February.

Duke discloses more 527 contributions, skewing Republican and toward key states

Duke has given extensively to 527 groups this campaign cycle – almost $2.4 million through this June, according to its corporate political expenditure reports. That money has gone disproportionately to Republican-affiliated organizations: nearly $1.6 million, versus $273,200 to Democratic-affiliated 527s.

The 527 giving continues a long-standing pattern: Duke is the second-highest utility contributor to three key Republican 527 organizations since 2008 ($5,248,289), and the top utility contributor to the parallel three Democratic 527 organizations during the same period ($2,291,250), according to an Energy and Policy Institute analysis. The groups are the Republican Governors Association (RGA), Republican Attorneys General Association (RAGA), Republican State Leadership Committee (RSLC), Democratic Governors Association (DGA), Democratic Attorneys General Association DAGA), and Democratic Legislative Campaign Committee (DLCC).

Duke continued to make large contributions to RGA and DGA – $210,000 and $225,000 this cycle, respectively. The Wall Street Journal has described RGA and DGA as providing “a loophole in state campaign-finance rules” by which donors “can simply—and legally—tell the groups that they have ‘an interest’ in a race or are making a donation ‘at the request’ of a gubernatorial candidate.” Two states in which Duke has utility operations, North Carolina and Indiana, have gubernatorial contests this year. Kentucky, where Duke also operates, held its election for governor in 2019.

Duke’s 527 contributions this cycle include significant disclosed expenditures in Florida, South Carolina, and Indiana, three states where the company operates utility subsidiaries.

Florida saw a chart-topping almost $1.2 million flow from the company to 527 groups. Duke directed this money almost exclusively to Republican-affiliated organizations, contributing just $200 to the Florida Democratic Party. Duke gave more than half a million dollars each to the state Republican party and Florida Republican Senatorial Campaign Committee. Florida Republicans are seeking to hold their majority in the state Senate this year amid several battleground races, and the swing state features a handful of other close down-ticket contests. Duke also contributed $50,000 to Friends of Ron DeSantis, though Gov. DeSantis – a Republican – is not up for election this cycle.

South Carolina saw somewhat more evenly divided contributions by Duke to 527s operating in the state. Of the $112,500 the company disclosed giving to that end, $70,000 went to 527 organizations affiliated with Republicans, compared to $42,500 to those associated with Democrats. Duke contributed to each party’s state House and Senate caucus. Republicans hold comfortable control of the state General Assembly, and combined with the office of the Governor, have had a “trifecta” since 2003, though the state’s political dynamics show some signs of change, and Republicans in South Carolina have challenged Duke’s political hegemony on a number of issues. State legislators approved a bill to study electricity market reform measures with bipartisan support, and elected four new Public Service Commissioners in September.

Duke’s disclosed corporate giving to 527 groups in Indiana, while on a smaller scale, skewed heavily toward Republican-affiliated organizations. The company contributed $52,500 to 527s in the state this cycle, it says, including $45,000 to Republican-affiliated groups and $5,500 to Democratic ones. Duke gave $20,000 to Eric Holcomb for Indiana. Holcomb, a Republican, is up for re-election this year. The Indiana Utility Regulatory Commission, which regulates Duke’s rates and profits, is appointed by the Governor. Duke also contributed to the state committees of both parties, to the tune of $25,000 for Republicans versus $2,000 for Democrats. Republicans have held trifecta control since 2011, including by a comfortable margin in the General Assembly.

Duke Energy disclosed 527 contributions: Florida, South Carolina, and Indiana, 2019-2020

Source: Duke Energy Political Expenditure Reports, 2019-2020

*Party figures do not sum to totals due to presence of not clearly party-affiliated 527 state-focused 527 groups

Duke PAC, utility executives’ contributions still heavily favor Republicans

Duke’s corporate PAC contributed $577,500 to Republican federal candidates and PACs in the 2020 election cycle, and $172,000 to Democrats, according to a recent Energy and Policy Institute analysis.

Much like at the state level, Duke’s strategy of heavily favoring Republicans federally could prove strategically risky for the company if Democrats make gains in – or even flip – the Senate. Democrats are seeking to pass national policies that would reduce greenhouse gas emissions, including from power companies. Joe Biden has campaigned on decarbonizing the power sector by 2035 and attaining net-zero emissions economy-wide by 2050. Congressional action would be required to enact parts of those plans.

Executives in Duke’s senior management gave at least $36,750 to Republican candidates for both federal and state office and PACs this election cycle, and less than $2,000 to Democrats, according to state and federal campaign finance data available at the time of publication.* Most of this – $19,000 – went to support Senator Thom Tillis (R-NC), who faced several primary challengers and is now running in a close race against Democrat Cal Cunningham. In addition to giving directly to his campaign committee, Lynn Good contributed another $5,000 to the Tillis-affiliated PAC, “Together Holding Our Majority”.

A Trump ally, Tillis has supported the use of fossil fuels and in the past denied climate science, though he now advocates for “market-based solutions” to climate change. As a state legislator, he supported a utility-backed measure to adopt North Carolina’s renewable portfolio standard, and was also criticized for weakening legislation to hold Duke accountable for coal ash clean-up in his role as Speaker of the House. Cunningham supports making emissions “100 percent carbon neutral” by 2050 and federal investment in green jobs.

Duke senior executives’ disclosed political contributions, 2019-2020

Source: Federal Elections Commission and Follow the Money data, 2019-2020

* The FEC lists additional contributions of $1,000 each from Jamil and Savoy made in the preceding days to WinRed, and earmarked for Tillis. These second transactions ($2,000 total) are omitted to provide a conservative estimate, as it is not immediately clear if they are additive or a “pass-through” of the same funds.

Good also gave $10,000 to the National Republican Senatorial Committee, bringing her total disclosed contributions this election cycle to $20,600, all to Republican candidates or committees.

Douglas Esamann, Duke’s Executive Vice President for Energy Solutions and President of its Midwest/Florida Regions and Natural Gas Business, made a $2,800 contribution to Tillis in September 2019. Esamann listed “Cinergy” as his employer, his occupation as “President PSI Energy,” and a Northville, Michigan address. 

All of Esamann’s other contemporaneous contributions list Duke Energy as his employer and his correct position. Esamann has not held the role of PSI President since 2004, and Cinergy merged with Duke Energy in 2006. It is not clear if these obvious errors were inadvertent or deliberate efforts to obscure a contribution to Tillis associated with Duke. EPI reported on similar errors on Dominion Executive Chair and former CEO Tom Farrell’s contributions last month.

Thom Tillis Committee filing with the Federal Election Commission showing Duke executive Esamann’s contribution with an errant employer and occupation. Source: FEC

* Former Duke Energy Executive Vice President Lloyd Yates, who left the company in September 2019, made several contributions to North and South Carolina Democrats this election cycle.

“VOTE” by Sean McMenemy is licensed under CC BY 2.0

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Lawsuit: FirstEnergy’s new CEO signed checks to indicted dark money group

A lawsuit alleges that FirstEnergy’s new acting CEO Steven Strah signed checks to Generation Now, the dark money group indicted in the federal racketeering case against former Ohio House speaker Larry Householder.

“… Defendant Strah, who ‘is now the President of [FirstEnergy],’ was FESC’s Senior Vice President and CFO until May 2020 and signed the checks that FESC paid to Generation Now,” a shareholder lawsuit filed on Sept. 30 by the pension fund for the Massachusetts-based IBEW Local 103 alleges, based on information from the FBI’s criminal complaint against Householder.

Strah was named acting CEO yesterday, when FirstEnergy announced the termination of his predecessor, Charles Jones, and two others. The firings are the latest fallout from a federal racketeering case that centers on allegations that Householder and four political operatives secretly received $60 million through a front group called Generation Now Inc. to secure a $1 billion bailout for two nuclear power plants via legislation, House Bill 6, passed last year by Ohio’s state legislature. The bill also subsidized coal plants and ended Ohio’s renewable energy and energy efficiency standards.

FirstEnergy has not been formally named or charged in the case, but is widely recognized to be the “Company A” described as the scheme’s primary funder in the complaint and a grand jury indictment. FirstEnergy, a subsidiary service company, and the utility’s political action committee have all been subpoenaed in the investigation. 

Strah is named as a defendant in multiple lawsuits against FirstEnergy related to the investigation.

“Bank account records indicate that x4788 is also a Company A Service Company account,” according to a footnote in the FBI’s criminal complaint, which prosecutors filed in a federal court in July. “For example, checks to Generation Now from x4788 were signed by Senior VP and CFO for Company A Service Company, who is now the president of Company A Corp.” 

Strah previously served as the President of FirstEnergy Corp., a position to which he was appointed “in May 2020 as part of the Company’s ordinary-course succession planning process,” FirstEnergy said in a press release yesterday announcing Jones’ firing. 

Strah was Senior Vice President and Chief Financial Officer for both FirstEnergy Corp. and the FirstEnergy Service Company in 2018, according to a regulatory filing. The criminal complaint lists two checks paid to Generation Now from account “x4788” in October 2018, when the group spent money to support state House candidates supported by Householder.

“In the final months before the 2018 general election, Company A dropped another $500,000 into the Generation Now account,” the complaint said. “This time the money was paid by check from account x4788.”

Evidence presented in the FBI complaint points to the “Company A Service Co.” as having “wired the bulk of the millions of dollars to Generation Now for the benefit of Company A-1.” 

“Company A-1” is widely assumed to be FirstEnergy Solutions, the subsidiary of FirstEnergy Corp. that in February emerged from bankruptcy as a new company called Energy Harbor, which now owns the nuclear plants. The Wall Street Journal reported last week that Energy Harbor has also been subpoenaed in the racketeering investigation. 

The FirstEnergy Service Company retained Juan Cespedes in 2018 to lobby for FirstEnergy Solutions. Cespedes, along with former Householder aide Jeff Longstreth, pled guilty in the racketeering case yesterday, hours before FirstEnergy fired Jones and promoted Strah. 

FirstEnergy also fired Michael Dowling, senior vice president of external affairs for the service company, yesterday, along with its senior vice president of branding Dennis Chack. 

The criminal complaint described phone records as evidence of multiple phone calls that Householder had with Jones, Dowling, and FirstEnergy’s director of state affairs for Ohio, who is likely lobbyist Ty Pine. Pine was not included in the list of employees fired yesterday. 

Top photo is of a cooling tower at FirstEnergy’s Davis-Besse nuclear power plant by Joseph Varnum obtained on Wikipedia Commons. Creative Commons Attribution-Share Alike 3.0 Unported License 

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