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FERC rejects Public Citizen complaint challenging PJM political spending

Federal regulators on Oct. 17 denied a complaint by Public Citizen asserting that the PJM Interconnection may have improperly recovered from customers millions of dollars in lobbying fees and campaign contributions.

According to the Federal Energy Regulatory Commission, the situation closely mirrors one at the center of a proceeding in which the agency in 2006 found that the ISO New England could recover certain lobbying costs so long as they were not used to finance partisan political activity.

In this case, FERC said, "Public Citizen has failed to put forward evidence showing that [PJM's] expenditures do not represent an educational or informational function of the [regional transmission organization] essential to its core operations or do not support policies that the RTO determines to be in the collective best interests of its stakeholders."

While all three sitting FERC members signed onto the decision, Commissioner Richard Glick during the agency's Oct. 17 open monthly meeting pressed PJM and other grid operators to be as transparent as possible with respect to any activities that might be seen as questionable.

"I think that ... the Federal Power Act does require us to ensure that PJM is allowed to recover those particular types of expenses," Glick said. "My concern in this particular case, even though I do support the order, is that I do think it would make some sense for PJM, and other RTOs as well, to provide stakeholders more information about their political activities, whether it be political contributions or lobbying activities."

In a February 2018 complaint, Public Citizen asserted that at least $456,500 PJM paid to the Democratic Governors Association, or DGA, and the Republican Governors Association, or RGA, since 2007, as well as "millions of dollars in PJM lobbying expenditures using at least five different lobbying firms," may have been improperly recovered from ratepayers. In particular, Public Citizen cited the commission's finding in the ISO-NE proceeding that "activities such as participation in political action committees [and] candidate fundraising … are clearly not recoverable lobbying activities."

But FERC in its Oct. 17 order cited PJM's assertions that the DGA and RGA are merely political organizations, not political action committees, and that those contributions were simply dues that allow the grid operator "to keep informed on policy initiatives impacting the wholesale markets, bulk power system operations and infrastructure and, as a neutral information provider, to share relevant details about such matters with state policymakers."

"Although the DGA and RGA may support candidates for office, they also maintain fora for obtaining relevant information about energy-related matters," FERC noted. "PJM pays membership fees to these organizations to maintain access to those fora and does not directly contribute to political campaigns." FERC further noted that RTOs "lack a profit motive" to pursue activities other than those that benefit ratepayers.

As for Public Citizen's concerns about money PJM paid to several lobbying firms, FERC accepted the grid operator's assurances that those expenses were for services related to outreach, education and similar activities even if those firms have been registered as lobbyists.

"Public Citizen has failed to put forward evidence showing that these expenditures do not represent an educational or informational function of the RTO essential to its core operations or do not support policies that the RTO determines to be in the collective best interests of its stakeholders," FERC said.

Finally, FERC denied Public Citizen's request that PJM be required to itemize and disclosure all political-related spending in the future, noting that it previously rejected a similar request the advocacy group made in a 2016 PJM rate proceeding.

"Public Citizen has not, in this case, meaningfully augmented its argument on this issue from the rate proceeding," FERC said. "[W]e find that the oversight and review functions PJM has established through its finance committee provide sufficient transparency and review of these expenditures." (FERC docket EL18-61)