Lobbying With Energy

The state’s new energy law is the result of hundreds of hours of hashing and rehashing, drafting and redrafting. It is the work of long debate and compromise.

It is also the result of millions of dollars of spending by electricity generators, distributors, buyers and sellers, all hoping the state will bend the electricity market in a way that benefits them best.

Those who earn their living in the world of electricity could see this fight coming from a mile away since previous legislation that opened up the market for buying and selling electricity — intended to lower prices dramatically — did exactly the opposite. Everyone knew something needed to be done to fix the mess, and they began gearing up for it well in advance.

And maybe nobody can gear up for a pricey fight like energy companies.

Northeast Utilities, the parent company of Connecticut Light & Power (which distributes power to most of the state), spent an incredible amount of money gearing up for this debate. Last year alone, the company spent $2.7 million lobbying the state according to filings with the Office of State Ethics, by far the most. (In a distant second place came the Connecticut Hospital Association, which spent $342,061, or about one-eighth as much.)

It’s difficult to convey how large a number NU’s spending really was, particularly for a part-time legislature in a small state, but here goes: NU’s spending represented 10.2 percent of the total spending by all other lobbying clients combined. And that was during a year when the legislature had a short session.

This was a about a fourfold increase over the previous year, when NU spent about $660,000. Clearly the issue was “on their radar screen” as people like to say.

Not all of the spending is on one bill of course, since NU has an interest in a bevy of legislative areas including taxes, the environment, transportation and much more, and the company has a lineup of lobbyists to meet all their needs. Six company employees spend time lobbying. It additionally has about $459,000 annually in contracts with four different outside firms: Gaffney, Bennett & Assoc., Updike, Kelly & Spellacy, DeFilippis Assoc. and Malloy & Assoc.

The Play’s The Thing

Why did NU up their spending so dramatically? Well, although they spent the most, they weren’t the only ones opting to spend more. And there are a lot more players on the other team.

Deregulating the electricity market, which the state initiated in 1998, though failing to lower prices, did bring in electricity generators and dealers trying to sell electricity.

Once they sold some, they wanted the market to remain open, and it shows.

Baltimore-based Constellation NewEnergy, which has made a number of the biggest commercial electricity sales in the state, spent less than $40,000 lobbying in 2005. But when the debate over the market began they responded by nearly doubling that, spending $62,000 in 2006 and hitting a a similar pace in 2007.

Dominion, one of the nation’s largest producers of energy, upped its spending in Connecticut by more than $20,000 in 2006, to about $205,000. Same thing for another major national electricity producer, PSEG Power, which spent only $106,000 in 2005 and then pushed that up 75 percent, to about $180,000 in 2006.

Not only that, but new clients jumped in to put down their first lobbying dollars in the state. The New England Power Generators Association, which has a mission of sustaining exactly such markets, spent nothing in 2005 but $8,200 last year and $6,600 so far this year. Noble Environmental Power, a wind power firm that is majority-owned by J.P. Morgan Partners and designed to profit off of new laws encouraging renewable energy, spent its first $40,000 this year. And more to come.

Whose money went the furthest? Like everything else in the 165-page energy bill, the answers aren’t in black and white. But Connecticut Light & Power and United Illuminating have not been allowed back into the generation business, which means outside producers and dealers still have a market here.

“We still believe that we should have the ability to go directly to generators and eliminate the middle man,” laments Mitch Goss, Connecticut spokesman for NU.

Perhaps he can take solace in the fact that although his company spent close to $3 million in 2006 toward a bill it doesn’t love, it earned $1.1 billion overall, so it can always spend more next time around.

Jonathan O’Connell is a Hartford Business Journal Staff Writer.