After pouring close to half a million dollars into ads and mailers last February during North Carolina’s legislative primaries, a political group funded entirely by Duke Energy and started by its former executives went dark.
Now, almost 15 months later, Citizens for a Responsible Energy Future is back.
The group’s Facebook ads are arguably slicker than the fuzzy television ones it aired not long before the pandemic. It now has a website and a partnership with veteran Republican political operatives that wasn’t apparent last year.
One thing hasn’t changed: The Duke-linked group is still pushing a controversial multi-year ratemaking scheme the utility was denied two years ago.
The new ad push comes as secret negotiations between Duke, House Republican leadership, clean energy businesses and large customers appear to be sputtering — with major legislation to retire coal plants, reform ratemaking or spur new renewable energy investments yet to appear.
To varying degrees, the offensive lacks context and distorts facts to back up the utility’s preferred policies, with one critic blasting it as “ludicrous and absurd.”
“I don’t think anyone — including Duke’s own executive leadership — believes the ad campaign it’s running,” said Dee Stewart, a longtime Republican strategist. The company’s effort through Citizens for a Responsible Energy Future, he said, “is the height of cynicism.”
Still, by referencing Big Tech’s influence and the recent cyberattack on the Colonial Pipeline, the ad effort could help energize some conservative base voters, said Chris Cooper, head of the political science department at Western Carolina University.
“American politics is increasingly nationalized, increasingly partisan, and increasingly defined by calls to identity,” Cooper said over email. “All three of these trends are clearly seen in this campaign which primes two identity-laden, partisan issues.”
Citizens for a Responsible Energy Future did not respond to a request for comment submitted through its website.
Group makes a splash, then appears to sink
Tony Almeida and Scott Gardner, both longtime former Duke employees, set up Citizens for a Responsible Energy Future in January of last year, listing no@email as the group’s contact address.
In February, Duke gave the organization two donations of $250,000 each. By early March, the 527 — known by the Internal Revenue Service code under which it’s regulated — had spent all but about $50,000 on direct mail, TV advertising, and sundry other legal and bank fees.
A loophole in state law shields almost all the beneficiaries of this spending. But filings with the Federal Communications Commission show at least two sided with Duke in 2019 — former Reps. Elmer Floyd of Fayetteville and Steve Jarvis of Lexington. Both candidates backed the utility’s bill to allow upfront, multi-year rate increases, which critics said would gouge ratepayers. Floyd lost his primary race. Jarvis won and now serves in the state Senate.
Duke’s official political action committee, meanwhile, pumped another $300,000 into those two candidates’ coffers and that of 75 others. All but a few backed the multi-year rate increase legislation. All but 13 were Republicans.
When the general elections rolled around, with control of the General Assembly at stake, Duke’s PAC again gave lopsidedly to Republican candidates. Rumors swirled that the company was funneling millions of dollars into dark money groups to help the GOP preserve its majority.
But Citizens for a Responsible Energy Future — which must report its donors and, in general elections, its preferred candidates — was nowhere to be seen. From Oct. 1 to Nov. 23, reports to the IRS show, the group spent $765 on bank fees and legal services.
New ad campaign, old policy priorities
The Duke-backed 527 burst back onto the scene last month, equipped with a new website, new ads, and a new Facebook page set up by the consulting firm run by Jim Blaine and Ray Martin — GOP operatives who worked for Senate Republicans for more than a decade combined.
The group attacked Johnston County GOP Rep. Larry Strickland, sponsor of an amendment that torpedoed the 2019 multi-year rate increase bill. Charlotte Democratic Rep. John Autry was also a target, having co-sponsored Strickland’s 2021 bill to study wholesale electricity competition in an interstate regional transmission organization, or RTO. The ads suggested the two men wanted to raise electricity rates, linking to a petition that reads: “Don’t raise my power bill.”
Little about RTOs is inherent; it depends on how they’re set up and governed. But most experts say competition for large electricity users, like Google and Apple, would lower wholesale rates and have no impact on retail customers. In any case, simply studying the reform won’t change anyone’s bills.
“Everyone understands that the assertion in these dark money ads, that Rep. Larry Strickland wants to raise utility rates, is ludicrous and absurd,” said Stewart, a consultant to the nonprofit Conservatives for Clean Energy.
In addition to singling out Strickland and Autry, the group produced several issue-specific ads linking to its website promoting multi-year ratemaking and attacking RTOs as a “Really Terrible Option.”
“If out-of-state companies control our power, we’ll pay more, big tech will pay less, and thousands could lose their jobs,” the ad against the RTO says, urging the audience to sign a petition to “Stop Big Tech’s NC Energy Takeover.”
The website doubles down on that claim. “Big Tech companies like Facebook, Google and Amazon – companies with a history of cutting off services to people they disagree with politically – can have a big role in supplying your home electricity through an RTO,” it says.
To be sure, Google and other large tech companies have been pushing for competition in the wholesale marketplace, said Steve Kalland, the director of the North Carolina Clean Energy Technology Center out of North Carolina State University. But the tech companies wouldn’t become utilities under an RTO.
“There are like 50 steps between the creation of an RTO and ‘Big Tech’ controlling individual homeowners’ electricity,” he said, “and none of those 50 steps are easy — and many of them are currently illegal.”
An RTO wouldn’t lead to a massive, Texas-style grid failure, as the website suggests, or eliminate North Carolina’s public utilities altogether. As for massive job losses, Kalland said, “that’s a pretty difficult claim to assert.”
The ads promoting multi-year ratemaking have a less tenuous link to reality. “Cyberattacks took out our gas supply,” they read, referring to the Colonial Pipeline shutdown. “Our electricity could be next. It’s time for state legislators to protect our power grid.”
Cybersecurity is a real problem for Duke, said Daniel Tait, research and communications manager at the Energy and Policy Institute, a utility watchdog group. The company was fined $10 million for 127 security violations between 2015 and 2018, including critical cyber assets. “If there’s a cyber risk out there, and the grid goes down,” Tait said, “that would be Duke’s fault.”
As the grid enables more distributed resources and becomes “smarter,” with self-healing sensors and other features that improve its resilience, it will also become more reliant on the internet and therefore more vulnerable.
The company must make major investments to improve cybersecurity, Kalland said, and allowing multi-year rate increases could enable that. But such schemes must be coupled with guardrails, such as performance-based incentives and decoupling the utility profit motive from electricity sales.
“You can’t just do multi-year ratemaking,” Kalland said. “That’s basically giving the utility a blank check to do whatever it wants.”
Talks drag on without fruit
The same conclusion was reached last year by a diverse stakeholder group including environmental interests, large electric consumers, low-income consumer advocates, city governments, clean energy businesses — and even Duke itself.
Convened by the administration of Gov. Roy Cooper, a Democrat, to determine the best path for achieving the state’s plan to reduce global warming pollution in the electricity sector by 70% by 2030, the group produced four key recommendations supported by a majority of participants.
The first: “The General Assembly and the North Carolina Utilities Commission pursue a comprehensive package of performance-based ratemaking reforms to include a multi-year rate plan, revenue decoupling, and performance incentive mechanisms.”
The second: “The General Assembly direct the [commission] to conduct a study on the benefits and costs of wholesale market reform and implications for the North Carolina electricity system.”
The exhaustive report was released in February and sent to the legislature, complete with draft legislation.
But since then, talks have contracted to include just Duke, select House lawmakers, and business interests. And while Duke CEO Lynn Good repeatedly told investors on a call last month that she was “optimistic” about legislation for which there is “broad support,” a bill is yet to materialize.
(Right after the earnings call, Reps. Dean Arp of Union County, Destin Hall of Caldwell County and John Szoka of Fayetteville introduced H 951, a bare-bones funding bill thought to be the vehicle for any agreement they can reach with Duke.)
Meanwhile, the Charlotte Business Journal reported, Duke is now squarely opposed to Strickland’s bill studying an RTO — despite being open to the concept two years ago and despite the company’s participation in the stakeholder group that suggested exactly that.
All these factors have many observers worried, including the North Carolina League of Conservation Voters Foundation, which with another environmental group launched its own six-figure TV and digital ad campaign in Charlotte and Raleigh.
“Despite Gov. Cooper’s clear warning he’ll veto any energy bill unless it significantly reduces carbon emissions and meets clean energy goals,” said Dustin Ingalls, director of strategic communications for the group, in an email, “we remain concerned the ultimate bill will be a sweetheart deal for Duke.”
According to Facebook’s data, the Citizens for a Responsible Energy Future ads cost less than $8,000 last month — much less than the environmental groups’ outlay. The ads still running as of last Friday had been viewed upward of 150,000 times, mostly by men and women over 55 in North Carolina.
Stewart, the Republican consultant, is confident they’ll flop. “It’s my belief that conservative citizens, opinion leaders, and policy makers will reject this ridiculous, misleading campaign,” he said.
But Cooper, the political scientist, said they could be successful by connecting concepts voters don’t know much about, like RTOs and multi-year ratemaking, to issues they’ve heard of and probably have an opinion on, like the Colonial Pipeline shutdown and the power of Big Tech.
“The ads are attempting to give potential voters a shorthand that works to the benefit of Duke Energy,” Cooper said. “And that, of course, is exactly what interest groups are designed to do.”