President Barack Obama’s promised assault on climate change begins in earnest this month with the roll-out of rules limiting greenhouse gas emissions by new power plants.
It’s one of the most divisive issues in Washington, and perhaps no one is as financially invested in the outcome as Southern Co. The Atlanta-based utility giant operates more than 30 coal-fired plants to keep the lights on in Georgia and elsewhere throughout the South. Over time, the rules — soon to be followed by limits for existing plants — could have a huge impact on Southern’s bottom line.
A formidable political force, Southern has long had a hand in shaping national energy policy. Now, faced with stricter emissions controls for greenhouse gases such as carbon dioxide, it is battling back hard. Southern spent $15.5 million on lobbying efforts in Washington in 2012, the highest annual tally on record for the company, according to an analysis of records by The Atlanta Journal-Constitution
So far this year, it has spent $6.4 million on 53 federally registered lobbyists, according to documents filed with the Senate Office of Public Records.
Among other major electric providers, Charlotte, N.C.-based Duke Energy has 21 lobbyists. American Electric Power, with headquarters in Columbus, Ohio, has 10 lobbyists registered in Washington.
Scott Segal, who lobbies for the Electric Reliability Coordinating Council, a Washington-based utility consortium, said Southern devotes more resources to lobbying than most utility companies and is “very active in pushing its point of view.”
In a nutshell, the company’s message is: We will provide cleaner energy; we just want to do it at an affordable rate on a reasonable technological timeline.
In an exclusive interview, Southern CEO Tom Fanning told the AJC he is trying to secure “clean, safe, reliable, affordable” energy. In contrast, he said, the Environmental Protection Agency is only worried about the clean part — with the result that its rules drive the supply of power down and the price up. If the recession had not suppressed the demand for power, he said, that demand might have outrun supply in the near future.
“Because EPA was requiring us to economically shut down a significant portion of the coal fleet, if the economy had kept growing, we would have had very tight reserve margins in the 2015-2016 time frame,” Fanning said.
The last few years have also seen an industry-wide shift from coal to natural gas, as gas supplies skyrocketed and prices plummeted, in part because of hydraulic fracturing, or “fracking.” Southern, too, has decreased its reliance on coal. In 2008, the company generated 70 percent of its electricity from coal-fired plants. That’s dropped to 35 percent.
Still, the two biggest greenhouse gas emitting plants in the nation are in Georgia, run by Southern subsidiary Georgia Power: Plant Bowen near Cartersville and Plant Scherer outside Macon. Company officials say the plants emit more greenhouse gasses than other plants because they generate more electricity.
That’s exactly the problem, say environmental lobbyists, who still see Southern as one of the most aggressive and entrenched defenders of coal.
“Southern tends to stake out what I would call the worst of the environmental positions generally,” said Stephen Smith, executive director of the Southern Alliance for Clean Energy. “Therefore they tend to represent the sort of retro, laggard end of the spectrum.”
Southern has an 11-person Washington D.C. team led by Bryan Anderson, who arrived three years ago from Coca-Cola. Additionally, Southern pays federal lobbyists at another 13 firms to work on a variety of issues. Among them are the firms of former Republican Mississippi Gov. Haley Barbour and ex-New York City Mayor Rudolph Giuliani.
Climate change is just one of the company’s concerns. Lobbying reports examined by the AJC show the company also promotes its views on issues ranging from taxes on dividends to cyber security to surface transportation. Southern is also pushing to amend the Dodd-Frank financial reform act. A portion of that law would require companies such as Southern that trade in derivatives to put up margins — or collateral — to back up a portion of their bets.
In addition to lobbying, Southern donates regularly to political candidates, particularly Republicans, at both the federal and state levels. During the presidential race, its employees and political action committee gave more than $50,000 to the campaign of GOP nominee Mitt Romney, compared to $13,000 to Obama.
In all, its employees and PAC gave nearly three times as much money to federal Republicans as Democrats in the 2012 election cycle, according to a tally by the nonpartisan Center for Responsive Politics.
Georgia Power also spends heavily in its home state and has largely been successful in winning its battles at the Georgia Legislature and the state Public Service Commission.
But of late, Southern and its subsidiaries have encountered a bit of a headwind.
Earlier this year, the PSC ordered Georgia Power to add more solar power into its energy mix. And in Washington, the White House directed the EPA to regulate carbon emissions. That came after Republicans and moderate Democrats in Congress — with Southern and other power companies urging them on — defeated Obama’s first-term gambit to create a cap-and-trade market in carbon credits.
Rules for new power plants will be unveiled later this month, with ones for existing plants slated for next year.
A DIFFERENT BALLGAME?
Experts say Southern has had success lobbying Congress because its theme — the importance of affordable electricity — resonates with the consumers who put lawmakers in office. It may be harder to make that case before EPA officials, whose mandate is clean air.
Fanning argues that handing the issue to the EPA was a mistake.
“When I think about the regulatory arena, I think what they are doing is largely well-intentioned – well-intentioned, leave off the ‘largely’ – but only Congress can balance all the competing objectives,” Fanning said.
Industry experts note that power companies have had some success in working with EPA, particularly on making mercury pollution limits less costly. But the carbon debate has higher political stakes for Obama, which will make it tougher for industry to influence the rule-making process.
Tim Peckinpaugh, a veteran Washington lobbyist, said in many ways it is harder to lobby a regulatory agency, where the process is far more formal than the rough-and-tumble of Capitol Hill. Input is typically offered through written comments or, occasionally, face-to-face meetings with agency staff. On Capitol Hill, personal relationships can carry greater weight, he said.
However, Southern’s lobbying ranks include several former top EPA officials, well versed in the technical nature of the agency’s rule-making. Southern executives recently met with EPA officials at the Office of Management and Budget to discuss the impending new power plant rule, one of many meetings with utilities.
“EPA will use feedback from all of these meetings to develop common-sense approaches to limit (greenhouse gases) from existing power plants, which are among the biggest emitters of this harmful pollution,” an agency spokesman said. “We look forward to hearing from Southern Company and others during this process.”
Whatever the EPA does to regulate carbon emissions, it is almost certain to end up in court. And that should give Southern and its allies time to work for the election of a president who shares their views.
Obama’s timetable calls for final regulations on existing power plants by June 2015, with states implementing them before he leaves office in 2017.
Said, Segal, the lobbyist for the electricity consortium: “I think that’s very unlikely.”
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