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Public Citizen asks FERC to look into PJM's spending practices

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Public Citizen asks FERC to look into PJM's spending practices

Citing the Federal Energy Regulatory Commission's policy of disallowing recovery by a regional grid operator of costs associated with political action committees and candidate fundraising, Public Citizen asked the agency to explore whether the PJM Interconnection paid millions of dollars in lobbying fees and campaign contributions and, if so, whether that money came from ratepayer-funded coffers.

According to a complaint Public Citizen filed with FERC on Feb. 20, at least $456,500 in campaign contributions made by PJM to political action committees since 2007 in order to finance "partisan electoral politics," as well as "millions of dollars in PJM lobbying expenditures using at least five different lobbying firms," went undisclosed to either FERC or the grid operator's stakeholders.

The commission, in a 2006 ruling on a challenge to certain of the ISO New England's expenditures, said, "activities such as participation in political action committees [and] candidate fundraising … are clearly not recoverable lobbying activities," the complaint recalled.

But PJM "routinely leaves blank the line 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 the regional transmission organization, Public Citizen said. "Unless all of these political expenditures are financed by non-filed rate resources, PJM Interconnection should be disclosing these expenses on its Form 1."

Even if some of those expenses were not paid using revenues from filed rates, the contributions were made in the grid operator's name and thereby "imply the endorsement of its members," Public Citizen said. "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."

FERC must require PJM to itemize and disclose all of its political-related spending and then must initiate any further proceedings that may be necessary, Public Citizen said.

Responding to the complaint, PJM spokesperson Susan Buehler said the grid operator "has acted in accordance with all applicable laws and regulations" and the complaint "is off base in many ways."

"It misrepresents the work done for PJM by organizations that inform it about legislative activities," she said.

Buehler addressed Public Citizen's suggestion that a law firm providing legal services for the RTO may also be "hosting or assisting PJM's own direct lobbyist." She acknowledged that an employee of law firm Wright & Talisman "did perform services that fit within the federal government definition of lobbying" prior to 2006 but said it was reported as such. Since then, the firm has been "our principal external legal counsel for FERC filings," and as such "has solely provided legal services for PJM," Buehler said.

As for the money PJM purportedly has contributed to two political action committees, Buehler said the RTO has paid fees to both the Republican and the Democratic Governors Associations "to attend events and discuss industry issues."

The complaint acknowledged that of the $456,500 in alleged political action committee contributions Public Citizen identified, $254,250 went to the Democratic Governors Association and $202,250 went to the Republican Governors Association.

Buehler clarified that the payments to those groups "were annual business council membership fees that allow PJM to provide input and participate in policy summits on energy industry topics that could impact PJM's members. Those payments were not intended to support any political campaign."

PJM's external affairs and communications costs, which include those membership fees, "are collected through PJM's filed stated rates consistent with FERC's order authorizing these costs to be collected from ISO-RTO members," Buehler said.

Speaking to Public Citizen's assertion that it had no choice but to address its concerns through a complaint filed at FERC rather than through the PJM stakeholder process because it has been barred from membership in the RTO, Buehler said the group "has many different ways to participate in the PJM stakeholder process."

PJM has "no record of Public Citizen applying to become a PJM member or user group member," she said. (FERC docket EL18-61)