ComEd Gave Money To Charities That Lobbied For The Utility

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State law says utility companies like Commonwealth Edison cannot make their customers pay for the cost of their lobbying expenses.

Yet, ComEd’s nearly 4 million ratepayers in Chicago and northern Illinois are on the hook for nearly $9 million in grants the company awarded this past year to an array of nonprofit organizations.

What some of those investments also have yielded for ComEd is a de facto, ratepayer-underwritten lobbying force in Springfield that has aimed to help nudge some of the company’s most prized legislative initiatives during the past decade.

A WBEZ analysis of legislative records shows a distinct pattern in which the same grant recipients getting ComEd charity that ratepayers subsidize are wearing dueling hats as utility company advocates before the General Assembly. The same is true for a long list of ComEd contractors who have advocated on behalf of the company.

WBEZ documented nearly $350,000 in ComEd grants since 2017 to a dozen nonprofit groups that formally — and, in some cases, repeatedly — lobbied for company-backed legislation in Springfield. Some charitable groups are overseen by board members who also happened to be ComEd executives.

The findings demonstrate how ComEd’s philanthropic generosity arguably overlaps with its political influencing machine, which is now under a microscope over past bribery-tainted lobbying efforts that secured legislative victories worth at least $150 million to the company. WBEZ reporting found the company benefited far more than that.

Last summer, ComEd agreed to pay a $200 million fine to the federal government to end a criminal probe by U.S. Attorney John Lausch’s office into past Springfield lobbying practices that prosecutors have alleged illegally targeted then-Democratic House Speaker Michael J. Madigan.

Madigan, identified dozens of times in various federal court filings as “Public Official A,” has not been charged.

“I don’t think it’s any one thing that’s ever the silver bullet that gives ComEd its power. It’s all of these practices combined,” said Abe Scarr, director of Illinois PIRG, a leading utility watchdog in Illinois that has opposed much of ComEd’s legislative priorities.

“And this one,” he continued, referring to the activities of ComEd-funded nonprofits, “is particularly egregious because it’s ComEd appearing to be charitable but using our money to do it and then getting political advantages out of it, as well.”

The ratepayer-backed money spigot directed at charities could dry up soon, however, as Democratic Gov. JB Pritzker is pushing to disallow public utilities like ComEd from billing customers for their charitable endeavors. That question could be decided by month’s end in Springfield if lawmakers approve energy legislation being pushed by Pritzker.

“The governor firmly believes that utility companies should not be allowed to bolster their political power at ratepayers’ expense,” Pritzker spokesman Jose I. Sanchez Molina said after WBEZ asked the governor’s office about the propriety of ComEd-funded charities advocating on the company’s behalf.

“Charitable contributions should still be made, but not on the backs of ratepayers,” he said.

For its part, ComEd denies exerting any pressure on the charities it funds or that there was any overarching strategy to layer them into the company’s overall lobbying plan in Springfield.

“We do not direct businesses or charities we support to submit witness slips,” ComEd spokesman Paul Elsberg said in a statement, referring to the paperwork that individuals and organizations file with the legislature to signify their opposition or support for a particular bill.

“However, we naturally reach out to businesses and community leaders about energy legislation that could affect our customers and our business,” he said. “In fact, we have an obligation to do so because it affects them, too, and we fully support their, and anyone’s, right to voice their support or opposition to legislation based on what’s important to them.”

ComEd-funded charities pushed for ComEd legislation

Of late, the single largest nonprofit recipient of ComEd charity that has advocated on the company’s behalf is El Valor Corporation, a Lower West Side human services provider with more than $3.8 million in state contracts since 2019.

In an April filing with state electricity regulators that outlined all of its charitable contributions, ComEd disclosed paying El Valor $110,000 since 2017.

Its board of directors includes two ComEd executives, and its longtime president and CEO, Rey B. Gonzalez, is former vice president for legislative and community affairs at ComEd.

The nonprofit went on record in 2019 as favoring a permanent extension of a lucrative ratemaking formula that has infused ComEd with hundreds of millions of additional dollars from ratepayers since its 2011 enactment, which El Valor also formally supported, legislative records show.

Gonzalez said his organization that provides services to more than 4,000 developmentally disabled children and adults, largely in the Latino community, in no way was “strong armed” by ComEd to support the company’s legislative priorities.

“El Valor can unequivocally state there has been no expectation of legislative support by ComEd in our 40-year relationship. The members of our board have not directed El Valor to conduct any legislative action on behalf of ComEd,” he said.

“The only expectation ComEd has ever had of El Valor has been to continue our mission in providing critical services to the Latino community,” Gonzalez said.

Charities with financial ties to ComEd have not been alone in advocating for the utility.

WBEZ found more than two dozen ComEd contractors submitted documents to House and Senate committees showing their support for utility legislation.

One firm, HBK Engineering, which ComEd disclosed paying nearly $2.5 million since 2017, had 95 of its employees submit slips in favor of the 2019 ratemaking legislation backed by ComEd, nearly a quarter of all the submitted support the bill received. Sixteen HBK employees tendered statements of support for 2016 legislation backed by ComEd and its corporate parent, Exelon Corp., that contained a multibillion-dollar bailout for two Exelon nuclear plants and was a measure referenced in the company’s deferred prosecution agreement with federal prosecutors.

HBK’s senior vice president and general counsel, John W. (Jack) Jerak, said ComEd never asked his company to lobby for its interests in Springfield.

“HBK’s professional interests and, not surprisingly, the individual interest of many of HBK’s employees, sometimes coincides with infrastructure related legislation and corresponding positions our clients and our legislators take or do not take regarding such legislation,” Jerak said in a statement.

“HBK encourages its employees to be informed, to participate, and to communicate with their legislators,” he said. “HBK does not include directions as to which way to vote.”

ComEd’s Elsburg said the company has not explicitly asked its contractors or charities it funds to avoid advocating for legislation ComEd favors in Springfield since agreeing to settle the federal investigation against it in 2020.

“Nothing in the [agreement] limits the right of our vendors or the charitable groups with which we partner to advocate on legislation or other public issues that are important to them, and we fully support their right to participate in the legislative process — just like everyone else,” Elsberg said.

Why nonprofits aren’t supposed to lobby

There’s a distinction to be made between ComEd’s contractors and its philanthropic targets aligning with the company at the statehouse. The difference is that nonprofits have tax-exempt status.

The Internal Revenue Service discourages charitable groups from engaging in “substantial” lobbying efforts to influence legislation because it could jeopardize their tax-exempt status, which is a crucial designation they need to raise money.

There’s no evidence any of the nonprofit organizations have run afoul of IRS rules by lending their names and reputations to ComEd’s lobbying efforts at the same time they’ve received utility grant money.

But one University of Chicago academic who has studied corporate philanthropy’s effects on policymaking said the activities involving ComEd’s grant recipients pose “really important questions” about the “many, many ways corporations can exert influence.”

“I think what’s more disconcerting when it comes to philanthropy and having nonprofits … being involved in these kinds of political processes is they’re not supposed to,” said Marianne Bertrand, an economics professor with the University of Chicago’s Booth School of Business.

In 2019, Bertrand co-authored a study showing how corporations use charitable giving as a form of “tax-exempt influence seeking,” a stealth lobbying effort that can influence policymakers if they know a favored charity has something seemingly riding on a legislative or regulatory outcome.

The research she helped assemble estimated that at least 7% of all corporate charitable giving nationally was associated with some discernible political purpose.

“I think there is value in having your message kind of being reinforced by groups that would appear to the decision-maker as being independent of you even though in practice, there is a financial relationship,” she said.

Bertrand said Illinois lawmakers should consider imposing requirements “as a minimum kind of reform” that would require charities to publicly disclose financial relationships to any corporation for which they advocate before the legislature.

And Scarr, with Illinois PIRG, said the advocacy by some of ComEd’s nonprofit grantees on its behalf, including chambers of commerce and business associations, may warrant further scrutiny by Illinois utility regulators.

“I don’t know what a local chamber of commerce really has to say about complicated utility regulatory policy. Not that they shouldn’t be allowed to weigh in. Everybody is welcome to have their say in our democracy. But clearly, it’s intended to show a breadth of support for ComEd,” Scarr said.

“But when it’s coming from groups who have directly benefited from contributions that ultimately come from ComEd ratepayers, not ComEd itself, it certainly creates an appearance problem from my perspective,” he said.

Dave McKinney covers Illinois politics and government for WBEZ. Follow him on Twitter @davemckinney.

via WBEZ Chicago https://www.wbez.org

May 26, 2021 at 06:40AM

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