First Half: "Power Politics" as Played by Progress Energy
Leaders at Progress Energy say donating to political campaigns and charitable causes is just part of their responsibility to the communities where they do business. "We are engaged in the political process," says company spokesman Keith Poston. "We invest in our community. That's what good corporate citizens do."
But a recent analysis by the Institute for Southern Studies charges that the intentions behind the giving are as toxic as the pollution coming from the company's coal-fired plants.
The Institute's June 13 report, called "Power Politics," found that the $8.5-billion company, which became Progress Energy when Carolina Power & Light merged with a Florida company, spent more than $600,000 in North Carolina political contributions over the last decade to water down air quality standards, ease concerns about its Shearon Harris nuclear power plant, and push deregulation of energy markets. The company's charitable giving--known in the corporate world as "strategic philanthropy"--topped $8 million last year alone.
Progress Energy's deep pockets enable the corporation to exert an "undue influence in shaping state politics" and "stifle criticism of corporate practices"--all to the detriment of citizens, consumers and the democratic process, says the progressive research and education center. The report documents three examples of how the company, which now serves 2.5 million customers in the Carolinas and Florida, has boosted both its bottom line and its corporate image by buying influence with donations to key politicians and nonprofit organizations. The examples include:
-- Pressuring the N.C. Environmental Management Commission to water down air quality standards in 2000, with support from then-Gov. Jim Hunt, a recipient of thousands of dollars in CP&L contributions.
-- Squelching protests from citizens and local elected leaders over nuclear waste storage at the Shearon Harris plant in Wake County, using political contributions to key state and national officials, including U.S. Rep. David Price, whose top corporate backer is CP&L.
-- Playing both sides of the debate over deregulation to preserve profit opportunities, by forming a "front group" with other industry leaders to oppose deregulation while simultaneously pressuring the N.C. Utilities Commission to approve the formation of a holding company that will allow Progress Energy to enter deregulated markets.
"I hope this report gives people a sense of the machinations of an energy company's manipulations of the public process to put their goals above the needs of people in this state," said report author Jordan Green. "Before we as citizens even get to the table, they've decided what policies they want the state to pursue. The wall of power is daunting."
And it's well-funded, according to the institute. In the last decade, CP&L gave $603,150 in direct political donations to state officials and candidates, not including "soft money" it gave to political parties. In the 1997-1998 election cycle, it ranked third among corporate PAC donors to North Carolina candidates, after Duke Power and Nationwide Insurance. (First Union and Bank of America rounded out the top five.) In the last election, 72 percent of state senators and 64 percent of state House members received CP&L contributions. Last year, the Progress Energy Foundation dispensed $7.6 million while CP&L doled out $1.1 million in charitable contributions to organizations in its service areas.
In the first example, "Power Politics" details the debate over air quality standards in the state's Environmental Management Commission two years ago, when industry lobbyists, including CP&L's reps, pushed for higher thresholds of nitrogen oxide pollution, despite widespread public support for more restrictive standards.
Supported by three of the politicians whose coffers they had lined--Hunt, Senate Pro Tem Marc Basnight, and House Speaker Jim Black--the company succeeded in pushing lower pollution standards, from the .15 pounds per million BTUs of nitrogen oxides proposed by environmental groups and supported by citizens, to the .21 pounds per million BTUs proposed by the industry.
The bias was so clear that EMC board member Bob Eating publicly protested the industry's influence over the governor, earning him a ticket off the board when his reappointment came up nine months later.
CP&L's ability to buy government action--or inaction--with political donations is starkly illustrated in the second example, the Shearon Harris nuclear-waste storage safety debate. Members of the N.C. Waste Awareness and Reduction Network and local elected officials have repeatedly but unsuccessfully asked Price to support their call for a full hearing by the Nuclear Regulatory Commission on CP&L's nuclear waste storage practices.
"My guess is I did more than any other elected official," Price told The Independent this spring, when questioned on why he took a hands-off approach to Shearon Harris. "In the end, the NRC decision did not go the way they wanted, and they wanted me to do more. But I felt I had done what I could do."
"Power Politics" asserts Price had large incentives to do little; CP&L has given $36,650 to Price since 1993, topping his hefty corporate contributors' list for the last four election cycles.
In the third example, the study alleges that the state's second-largest electricity supplier has manipulated the government regulatory process to maneuver into the most profitable position as a new era of deregulation approaches. In 2000, CP&L put up a minimum of $900,000 and led a $17 million campaign with eight other utilities to secretly support two front groups--Citizens for State Power and the Electric Utility Shareholders Alliance--to lobby against federal electricity deregulation, the study says. The industry's politicking drew ire from a U.S. House Commerce Committee member, who called it "shady behavior."
At the same time, CP&L successfully sought permission from the N.C. Utilities Commission to reorganize as an Enron-like holding company that would enable it to pursue profits in deregulated markets--markets the company's 2001 annual report predicted would provide up to 50 percent of its income by 2005. The seven members of the utilities commission who approved the move were all appointed by Hunt, who received $100,000 in campaign funds from CP&L and Duke Power, according to the report.
In addition to sowing support with campaign contributions and lobbying, the company's "charitable giving" also shows a consistent pattern of planting well-timed goodwill in small and large quantities.
As public outcry over nuclear waste storage at Shearon Harris grew steadily louder among the plant's Chatham County neighbors this spring, the Chatham County Arts Council put out a press release praising the company for giving $5,000 to an arts program for elementary school students.
On March 14, 2002, the arts council's release said: "The executive director of the arts council said immediately upon contacting Mr. Marty Clayton, CP&L Community Relations Manager, her pre-conceived notions of their corporation being unapproachable and impersonal were dismissed. 'Mr. Clayton conveyed genuine interest, and a desire to be involved with enhancing the quality of life through education in Chatham County. I was pleasantly surprised and delighted to find that despite their somewhat daunting corporate structure, that they are a corporation with a face.'"
The Chatham Council on Aging ($15,000) and the Chatham County Economic Development Corporation ($5,000) also have benefited from CP&L's corporate-image-protection program. Other recipients of the company's beneficence include organizations with much broader-reaching goals, some of them in seeming conflict with the agenda of the company whose Roxboro coal-fired plant ranks at the top of the U.S. Environmental Protection Agency's list of severe chemical polluters, including the North Carolina chapter of The Nature Conservancy, which received $1 million. The N.C. Center for Non-Profits, a statewide umbrella organization, received $35,000.
The company's current annual budget for charitable donations is $14 million, according to Poston, the Progress Energy spokesman who was a little surprised to be asked for a reaction to the "Power Politics" report, given that so far, every local and national mainstream media outlet except the St. Petersburg (Fla.) Times has ignored it.
Poston was quick to ridicule the notion that the company's motives are anything but "good corporate citizenship."
"I was actually sort of surprised the report didn't put us on the grassy knoll in Dallas," he says.
The executive summary of the report is available online at: www.ncwarn.org/CP&L/nr-06-13-02issundueinfluence.htm. (Click on the "executive summary" link at the bottom of the press release.)
For a complete copy, call the Institute for Southern Studies at (919) 419-8311.
The Power Politics Index
-- Number of electricity customers Progress Energy (the parent company of Carolina Power & Light) has in North Carolina, South Carolina, and Florida: 2,500,000
-- Chances that a North Carolina state senator received campaign contributions from Carolina Power & Light (CP&L) in the 2000 election cycle: 7 in 10
-- Chances that a U.S. senator has received campaign contributions from Enron since 1997: 6 in 10
-- Amount CP&L's Employee PAC gave to North Carolina state-level candidates from 1990 to 2000: $603,150
-- Amount by which the CP&L Employee PAC exceeded campaign contribution limits to North Carolina gubernatorial candidate Mike Easley in 2000: $1,000
-- Ranking of CP&L's Roxboro coal-fired plant for severity of chemical pollution, according to the EPA: 1
-- Chances that the air was unhealthy to breathe somewhere in the state of North Carolina during the summers of 1998 and 1999, according to North Carolina Public Interest Research Group (N.C. PIRG): 1 in 3
-- Number of asthma attacks statewide caused by smog (a byproduct of nitrogen oxide) each year, according to N.C. PIRG: 240,000
-- Number of citizens who weighed in on hearings across the state of North Carolina in 2000 on new air quality standards for coal-fired power plants: 11,000
-- Percentage of citizens who favored strict, new emissions standards of 0.15 lbs per million BTU of nitrogen oxides, as proposed by environmental groups: 97
-- Number of executives formerly employed by the failed energy corporation Enron hired by Progress Energy since January 2002: 1
Source: Institute for Southern Studies
Second Half: At Least One Reason For All of Us to Breathe EasierAll of us can claim at least one solid victory this year in the fight for clean air: The Clean Smokestacks Act, requiring CP&L and Duke Energy to curb unhealthy emissions from their 14 coal-fired power plants in North Carolina, was signed into law by Gov. Mike Easley. The legislation was hailed by environmental groups, Easley crowed to a Capitol signing ceremony crowd of 200, and the utilities back it, too. "Yes, the lion and the lamb will lay down together," he said. The only dissents were registered by conservatives who said that the plants aren't really polluting the air and the estimated $2 billion price tag--over 10 years--is therefore a waste of money. N.C. Citizens for Clean Air, a coalition of nine environmental and health advocacy groups (American Cancer Society, American Lung Association etc.) disagreed. "This major reduction in the air pollution emitted by the [plants]," its statement said, "will cause significant public health improvements." Under the act, the utilities will cut 78 percent of ozone-causing nitrogen oxide emissions by 2009 and 74 percent of particulates (sulfur dioxide) by 2013. The cost of refitting the 14 plants will be borne by utility customers, but as Easley says, no rate increases will be needed. How's that again? Well, rates were going to come down in future years as the utilities retired old construction debts. Instead, a five-year rate freeze will take effect, putting the needed money into Duke and CP&L coffers. The rate freeze broke a two-year stalemate on the bill in the General Assembly. It came after the push to deregulate electricity rates in North Carolina collapsed in the wake of California's debacle. Deregulation might have forced Tar Heel utilities to cut their rates, at least for big manufacturing customers, to fend off outside competitors. When that threat went away, Duke and CP&L pitched the freeze idea to a receptive Easley, who claimed a victory for the state: "This is the most aggressive clean air bill in the nation," he said.
Death to Taxes, Dole Declares
Owner Lou Goldberg was our host at the Glover Printing Co. in Raleigh, where Elizabeth Dole's candidacy for U.S. Senate was to be endorsed by the National Federation of Independent Business. Goldberg began by saying that he's paid $300,000 in insurance premiums over the last decade to assure that, when he dies, taxes on his estate won't prevent his son, Brian, to whom he's given part of the company, from taking over the rest.Ah, the estate tax, or death tax if you will. It's a kind of Rorschach test of the way you view government and the economy. On the one hand, Goldberg and the 15,000 other business owners in North Carolina who belong to the NFIB have put its repeal on the top of their agenda, says state director Perri Morgan. They want to pass the family business or farm to their heirs, but if it's worth a lot and cash is short, the heirs may have to borrow to pay the taxes on it ... may even be forced to sell it. On the other hand, progressive folks say, if the estate is large, should not some taxes be paid in recognition of the fact that a stable society has helped to make such wealth possible?
Moreover, the part of our national worth owned by the richest few is expanding to the point that, as economist and New York Times columnist Paul Krugman says: "The Gilded Age looked positively egalitarian compared to the concentration of wealth now emerging in America."
Republican pundit Kevin Phillips, in his new book Wealth and Democracy, warns that democracy itself is in jeopardy if the rich are allowed to amass vast fortunes while our remaining share of the national pie shrinks. That's vintage GOP doctrine, Phillips argues, going back to Teddy Roosevelt, the original trustbuster.
So when Dole finished her remarks, which expressed a general aversion to taxes ("Heaven knows, we've all been overburdened by taxes," she declared), we asked her about Phillips' thesis, and whether it was not possible to devise an estate tax that would let small farmers and business owners escape while still collecting from the mega-rich. After all, less than 2 percent of estates are taxed now.
She quickly deflected the issue. "I think it's a question of fairness," Dole began. "It's the second time there's been a payment, and I don't think people need to be taxed twice. And when a person has worked so hard--I can remember President Reagan talking about this, and he said it's just not right for a person who's been working seven days a week, you know, night and day, throughout the year, year after year after year they've worked hard, they've put their effort into it, and they cannot simply pass this on to their family."
Well, if they've been working night and day. But what about the billionaire's estate? What about the appreciated values of assets that never have been taxed? So, later, we tried again. Are you concerned at all about the increasing concentration of wealth. ...?
Dole cut this off forthwith. If her earlier response had only the slightest edge to it, she was now clearly displeased. "The top 10 percent pay 71 percent of the taxes in this country," she said brusquely. "My view is, in terms of income tax rates, those who are paying taxes deserve to have a tax break."
The subject now changed from estate taxes to income tax rates, Dole went on to review the impact of Bush administration tax cuts on, not the billionaire, but the single mom with one child and an income of $22,000 a year. She will henceforth pay no federal income tax thanks to the Republicans, Dole said, adding: "The average family in North Carolina is paying 32 percent of their income in taxes."
When it was over, we chatted a bit with Goldberg. "I understand your question," he said, "but I don't know where you would set the line." His business, with 38 employees, is worth about $5 million, he said. Would estates of that size be exempt? Or would the line be $4 million? he joshed.
Right now, the first $1 million of an individual's estate ($2 million, effectively, for couples) passes without taxation, an amount scheduled to increase--under last year's tax-cut law--to $3.5 million by 2009. Then, under the law, the estate tax disappears in 2010, for one year; but in 2011, the law expires, the tax comes back and the exemption level drops to the pre-2002 number of $675,000.
Why such a loopy law? Simple. Congressional Democrats insisted on pointing out that the cost of permanent repeal was a projected $740 billion in the next decade. Proponents didn't like the sound of that, so they repealed it for one year only--for the low, introductory price of just $55 billion!
We're talking about real money here, in other words, because, hey, the mega-rich are really loaded! Where to draw the line? Good question. But for now, the question is whether there will be any line at all.
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