Consumers Energy: Settlement won't stop political spending by parent company
Lansing — The parent company of Consumers Energy could continue contributing to political nonprofits despite a temporary ban for the utility itself, a utility official said Wednesday to the dismay of lawmakers critical of the spending.
Consumers has donated tens of millions of dollars to political nonprofits in recent years but agreed to freeze the spending as part of a settlement brokered with various parties and approved in January by the Michigan Public Service Commission.
The provision was initially hailed as a “bombshell” by former state Rep. Gary Glenn, a Williams Township Republican who feuded with utilities. Glenn lost his 2018 state Senate primary amid a barrage of opposition ad spending by utility-backed groups.
But the prohibition could have limited impact because it does not apply to CMS Energy, a holding company that owns Consumers, said Brandon Hofmeister, the Jackson-based utility’s senior vice president of governmental, regulatory and public affairs.
CMS Energy is “interested and active in Michigan public policy,” Hofmeister told lawmakers on the Senate Energy and Technology Committee, and the Consumers settlement “doesn’t impact any activities that CMS Energy might pursue in the future.”
That admission shows Consumers was “misleading or disingenuous” when it agreed to the settlement, said state Sen. Tom Barrett, a Potterville Republican who won election last year despite opposition spending by the Citizens for Energizing Michigan’s Economy, a nonprofit with ties to the public utility.
Consumers donated roughly $43 million to the political nonprofit in recent years, Michigan Public Service Commission Chair Sally Talberg told lawmakers last week. In additional to working for Consumers, Hofmeister is a vice president of Citizens for Energizing Michigan’s Economy, according to state records.
“The amount that was spent (in 2018 elections) raised a considerable amount of eyebrows, especially given the fact that there are not competitors for these industries,” Barrett said, referencing Consumers’ status as one of the state’s two incumbent utilities.
“They are essentially taking in money through rate payer funds, playing a shell game with them, converting some to supposedly shareholder money and then using that to fund these political groups to perpetuate their preferred status in the marketplace.”
Consumers has consistently maintained that it does not use rates paid by customers to fund political activities. Language included in the settlement was designed to reinforce that longstanding policy, Hofmeister said.
“That has been the case throughout, but we wanted to be extra clear with all interested parties that when Consumers Energy decides to engage in political or public policy education, that we do so without those costs being recovered by our customers.”
While the Michigan Public Service Commission approved the settlement, it was negotiated with nearly two dozen parties who had joined the Consumers rate case, including the Association of Businesses Advocating Tariff Equity, Michigan Environmental Council and cities of Flint and Grand Rapids.
It’s not clear who pushed to include the political spending prohibition in the agreement, said Nick Assendelft, a spokesman for the Public Service Commission. But Consumers' parent company is not regulated by the commission, he confirmed.
Consumers reported $43 million in contributions to Citizens for Energizing Michigan’s Economy as part of a lengthy financial disclosure filed with state regulators. The non-profit finances so-called issue advocacy campaigns that do not require it to disclose donors or spending to the state.
“It is a dark money group,” said Craig Mauger of the Michigan Campaign Finance Network, which tracked at least $770,000 in advertising that the group paid for last year.
Glenn, who pushed “energy choice” policies opposed by utilities during his tenure in the state House, called recent political spending by Consumers — and the possibility that spending may continue through its parent company — “an outrageous shell game that lends itself to corruption.”
He encouraged the Legislature to codify the state settlement into law and expand it to include Consumers’ parent company, along with DTE Energy. The state should also treat utilities like casinos and ban political contributions from shareholders, Glenn suggested.
"Utilities have a 90 percent monopoly by the pleasure of the state, and the utility lobbyists use money compelled from rate payers’ pockets to influence the outcome of elections that determine who their regulators will be,” the former lawmaker said. “Clearly, that should be a point of public concern.”
Consumers spokeswoman Katie Carey reiterated that contributions to Citizens for Energizing Michigan’s Future did not come from rate payer funds, saying the company maintains “different pots of money” for political activities.
The nonprofit ran so-called issue ads criticizing several lawmakers or praising their opponents in last fall’s primary elections, including Republican Sens. Barrett and John Bizon, who both voted against a 2016 energy law the utilities supported.
The group spent up to $60,000 in some of the races, Mauger said. “That doesn’t necessarily sound like a lot, but in a primary that amount of TV advertising is actually very significant, and it’s not something you see very often," he said.
Glenn said three separate dark money groups linked to utilities spent money to oppose him or support Sen. Kevin Daley of Lum in the 31st state Senate Republican primary, which Daley won by about 5,000 votes.
“They hung my bloody hide on the wall as a warning to any other legislator who might dare to take on their monopoly privileges,” Glenn said. “The fact they were able to take out the one person who was their most vocal critic will only make things worse.”