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Federal Energy Regulatory Commission Filing: RE Campaign Contributions and Lobby Expenditures

FERC Filing: PJM Section 206 Complaint

Section 206 Complaint of Public Citizen, Inc.

Public Citizen, Inc. files this complaint pursuant to Section 206 of the Federal Power Act (FPA) and the Commission’s rules there under seeking action by the Federal Energy Regulatory Commission (FERC) against PJM Interconnection LLC for potential violations of the Federal Power Act’s requirement that all rates be “just and reasonable”—including the rate FERC authorizes PJM to charge in order to recover the RTO’s expenses.

Public Citizen has identified at least $456,500 in campaign contributions made by PJM Interconnection to political action committees for the purpose of financing partisan electoral politics that have not been disclosed to FERC or PJM’s stakeholders. Additionally, Public Citizen has recorded millions of dollars in PJM lobbying expenditures using at least five different lobbying firms that also have not been disclosed to FERC or stakeholders, contrary to Commission precedent.

PJM Interconnection utilizes myriad subsidiaries including several non-FERC jurisdictional subsidiaries, and PJM may finance these political activities through those subsidiaries rather than through its filed rate. PJM’s reporting to its stakeholders and FERC does not provide details adequate to determine which political spending uses filed-rate revenues and which does not. Regardless of whether donations from PJM Interconnection to the political action committees used revenues from filed rates, the contributions were made in the name of PJM Interconnection and thereby convey tacit endorsement by PJM’s members, even though it is clear that PJM members did not provide their consent.

To ensure just and reasonable rates and compliance with prior Commission precedent, FERC must require PJM to itemize and disclose all political-related spending, including campaign contributions and lobbying expenses, and clearly document which political expenses are funded through filed rates. If PJM is financing partisan political activities through its filed rate, than such funding is unjust and unreasonable.

Public Citizen is unable to directly address the issues raised in this complaint in PJM’s internal stakeholder process because PJM informed Public Citizen in 2015 that Public Citizen is not qualified to serve as a PJM member. PJM’s decision to bar Public Citizen from membership prevents Public Citizen from meaningfully participating in PJM’s stakeholder process. As a result, Public Citizen’s only recourse is Section 206.

About Public Citizen

Public Citizen is a 501(c) research and advocacy organization representing the interests of more than 400,000 members and supporters across the country. Our annual reports and Form 990 financials filed with the Internal Revenue Service can be accessed at our web site.1 We routinely intervene and participate in FERC proceedings and dockets.

Conflict with PJM Political Activities, Prior FERC Orders and the FPA

The Commission has ruled that “activities such as participation in Political Action Committees [and] candidate fundraising … are clearly not recoverable lobbying activities.”2 In addition, FERC has ordered transparency standards for an RTO’s recoverable lobbying expenditures:

“…to provide greater transparency to [RTO] stakeholders and allow them to
achieve a clear understanding of the nature of such expenditures, the Commission will require [the RTO] to prepare and post on its website a monthly report concerning “external affairs” and “corporate communications.” The report, among other things, should identify all meetings (including those conducted by telephone) held in the past month by or on behalf of [the RTO] with any public official, including those in the legislative or executive branches of federal or state government, as well as a description of the attendees and the issues addressed during the meetings. This will give stakeholders the opportunity to review activities…”3

PJM’s Campaign Contributions

Public Citizen has identified at least $456,500 in campaign contributions made by PJM Interconnection to two Political Action Committees: the Democratic Governors Association and the Republican Governors Association. On their respective 2017 U.S. Internal Revenue Service Forms 8871, 4 the Democratic Governors Association lists its mission statement as supporting “the election of Democratic Governors and other non-federal candidates,” and the Republican Governors Association lists its purpose as “to assist in the election of Republican gubernatorial candidates and the reelection of incumbent Republican Governors.”

Beginning in October 2007, and most recently in August of 2017, PJM Interconnection paid for at least $456,500 in contributions to both the Democratic Governors Association and the Republican Governors Association. Public Citizen catalogued these contributions through searches of the IRS 527 database,5 and has attached copies of each of the PJM Interconnection contributions to this filing as Exhibit A.

Campaign contributions made in the name of PJM Interconnection imply the endorsement of its members. That’s why PJM’s Code of Conduct explicitly limits the ability of its own employees to make contributions to political action committees that appear to be attributable to PJM. Page 21 of PJM’s Code of Conduct, Political and Charitable Activities, outlines various restrictions on the ability of PJM employees to engage in political activities, including prohibitions on PJM employees making political contributions “as a representative of” PJM, and bans employees from participating “in political activities while wearing the PJM logo on their clothing.”

PJM’s Filed Rate

Schedule 9 of the PJM Open Access Transmission Tariff describes how the costs of the operation of PJM Interconnection LLC can be recovered from transmission customers and other users.7 Manual 33 describes allowable administrative services authorized under the Operating Agreement: the purpose of PJM is “to facilitate coordinated operation of their electric systems and interchange of electric capacity and energy, to ensure the efficient operation of an energy market based on the PJM Open Access Transmission Tariff.”

The Operating Agreement details the role the independent Finance Committee has to oversee PJM’s revenues and expenses: “The purpose of the PJM Finance Committee is to review PJM’s consolidated financial statements, budgeted and actual capital costs, operating budgets and expenses.”9 Public Citizen contacted multiple members of PJM’s Finance Committee, and we were informed that PJM does not provide any detail on any of its political spending to the Finance Committee.

A review of archived Finance Committee meetings posted on PJM’s web site reveals no details on campaign contributions or lobbying expenditures by PJM Interconnection,10 and the paltry archived meeting records posted by PJM provide little to no useful information on the Committee’s deliberations. The archived record keeping PJM utilizes to memorialize stakeholder activities is sparse, haphazard and omits details of discussions. PJM’s failure to record or transcribe stakeholder meetings where proposed tariffs and rates are deliberated is no longer an acceptable practice in the year 2018, as technology has enabled inexpensive recording and archiving tools to preserve the full record of stakeholder meetings. We have more detail from the fossil record of the Brontosaurus from the Late Jurassic epoch 150 million years ago than is contained in PJM stakeholder committee meeting minutes from 6 months ago. PJM Interconnection routinely leaves blank the line for Account 426.4 (“Exp. for Certain Civic, Political & Related Activities”) on its Form 1 annual report filed with FERC, despite the numerous lobbying expenditures and campaign contributions attributed to PJM Interconnection. Unless all of these political expenditures are financed by non-filed rate resources, PJM Interconnection should be disclosing these expenses on its Form 1.

It is important to note that the $456,500 in campaign contributions that Public Citizen identified may not be the full universe of such payments. As part of this proceeding, PJM Interconnection must be required to provide a full accounting of all political contributions.

PJM obtains some of its revenue from a non-FERC-jurisdictional subsidiary, PJM Technologies, Inc., which in turn has two subsidiaries, PJM Environmental Information Services, Inc. and PJM EnviroTrade, Inc. All political action committee contributions and lobbying expenditures are made in the name of PJM Interconnection, not in the name of any non-FERC-jurisdictional subsidiary.

FERC Must Require PJM to Post Monthly Reports to Its Public Website Detailing all Political Spending

PJM Interconnection does not disclose to FERC or its Finance Committee any details about lobbying expenditures or political action committee contributions, in potential violation of its Operating Agreement and FERC precedent. Limited information about PJM’s federal lobbying expenditures is available in a Congressional database,11 and using that database Public Citizen has identified twooutside lobbying firms retained by PJM: Ray Billups and Ogilvy Government Relations. Searches of state databases reveal at least three outside lobbying firms hired by PJM Interconnection: Vectre Corporation, Squire Patton Boggs, and Greenlee Partners, LLC.

Ray Billups first registered to lobby on behalf of PJM on January 17, 2008,12 and since then PJM Interconnection has paid Mr. Billups at least $540,000. None of these contracts has been disclosed to PJM’s Finance Committee as required by PJM’s Operating Agreement; no detail of their purpose or terms has been disclosed to the Finance Committee as required by PJM’s Operating Agreement; and no status reports have ever been provided by Mr. Billups to the PJM Finance Committee to explain exactly what kind of advocacy Mr. Billups performs for PJM, as required by the Operating Agreement.

Ogilvy Government Relations (“Ogilvy”) registered to lobby for PJM beginning on August 9, 2002. 13 PJM Interconnection has paid Ogilvy at least $3.1 million in total―or $200,000 every year since 2004. Ogilvy’s contracts have not been disclosed to PJM’s Finance Committee; no detail of their purpose or terms has been disclosed to the Finance Committee; and no status reports have ever been provided by Ogilvy to the PJM Finance Committee to explain exactly what kind of advocacy Ogilvy performs for PJM.

PJM has hired outside firms to lobby on its behalf in at least three states. On May 2, 2017, Philip F. Abraham of Vectre Corporation registered to lobby in the Commonwealth of Virginia on behalf of PJM Interconnection.14 In 2017, PJM Interconnection paid two lobbyists from Squire Patton Boggs—Timothy Cosgrove and Nathanael Jonhenry―to lobby in Ohio.15 In Pennsylvania, PJM has 10 lobbyists from Greenlee Partners, LLC: Kara Beem, William Bova, Clint Cullison, Benjamin Dannels, Frank Gates, Ken Rapp, Stanley Rapp, Matthew Steck, Frank Tulli, Jr., and Andrew Zwally.16 Since states vary in their reporting requirements for lobbyists, this should be considered an incomplete list.

PJM Shares a DC Lobbying Office Law Firm Wright & Tailsman

On lobbying materials, PJM lobbyist Craig Glazer lists his address as 1200 G St NW Suite 600. This is the same address listed for the law firm Wright & Tailsman, P.C. Wright & Tailsman registered as PJM’s lobbyist on November 12, 1999, 17 but filed a lobbying termination effective December 31, 2005. 18 Wright & Tailsman currently provides legal services for PJM, and it is possible that this arrangement includes hosting or assisting PJM’s own direct lobbyist. FERC should compel PJM to provide more information about the nature of its legal or lobbying arrangements with Wright & Tailsman.

Per 18 CFR § 385.206, Public Citizen provides additional information not already addressed in the complaint:

State whether the issues presented are pending in an existing Commission proceeding or a proceeding in any other forum in which the complainant is a party, and if so, provide an explanation why timely resolution cannot be achieved in that forum.

This issues presented in this complaint are not pending in any other proceeding.

State whether Enforcement Hotline, ADR, etc. or other informal dispute procedures were used or why not; whether ADR could successfully resolve the complaint.

Public Citizen is asking for actions to be taken by the Commission, including statutory interpretations. Informal dispute procedures are not applicable.

State the specific relief or remedy requested, including any request for stay or extension of time, and the basis for that relief.

In order to ensure just and reasonable rates and compliance with prior FERC precedent, FERC must require PJM to itemize and disclose all political-related spending, including campaign contributions and lobbying expenses, and clearly document which political expenses are funded through filed rates. Once that disclosure is complete, further proceedings may be necessary. Public Citizen requests that the Commission set this complaint for notice and comment, and after the conclusion of the comment period, set the matter for a hearing to address PJM’s political spending that violates just and reasonable rates.


Respectfully submitted,

Tyson Slocum
David Arkush
Public Citizen, Inc.
215 Pennsylvania Ave SE
Washington, DC 20003
(202) 588-1000