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May 02, 2012

In Merger Lobbying Fight, Who Outgunned Whom?

During the pitched Statehouse fight over a proposed merger between Vermont’s two largest electric utilities, both sides raised the specter of the big, bad opposition quashing the just and the true with lobbying and advertising cash.

Rep. Patti Komline (R-Dorset), who opposed aspects of the merger between Green Mountain Power and Central Vermont Public Service, repeatedly accused electric company lobbyists of intimidating lawmakers who signed on to an amendment she supported. Meanwhile, Gov. Peter Shumlin, who backed the merger, said he and the electric companies were drowned out in the message war by an out-of-state advocacy group: AARP.

So who outgunned whom?

Lobbying disclosure forms recently filed with the Vermont Secretary of State’s office paint a portrait of the opposing armies — though not a complete one.

During the first three months of the year, Green Mountain Power hired 14 outside lobbyists to coordinate the company’s advocacy work in the Statehouse, in addition to two in-house employees — Donald Rendall and Robert Dostis — who also lobby legislators. The price tag? $54,183 for the first quarter — roughly $14,000 more than the company spent on lobbying during the same quarter last year.

GMP spokeswoman Dorothy Schnure said the company has a long-standing contract with KSE Partners to provide general lobbying support for a host of issues before the legislature. The company brought on MacLean Meehan & Rice to focus specifically on the merger. GMP also contracted with former VP Stephen Terry, while KSE subcontracted with independent lobbyist Jeanne Kennedy.

“We have always had a lobbying team in Montpelier because it’s important for legislators who are passing bills to understand the effect on customers,” Schnure said.

While Green Mountain Power’s owner — Montreal-based Gaz Metro — first announced its offer to buy CVPS last June, much of the action under the golden dome happened during the last month. The recently-filed disclosure forms only cover lobbying costs through March 31 — so the full lobbying price tag won’t be clear until July.

In total, GMP spent $124,764 on lobbying last year. Those expenses cannot be billed to ratepayers and must come from shareholders.

CVPS, meanwhile, spent $27,350 on lobbying during the first three months of the year — up from $23,820 last year. Of that, $22,000 went to a five-member team at Downs Rachlin Martin headed by Montpelier mayor John Hollar and $5350 went to CVPS vice president Brian Keefe, who coordinates lobbying and communications for the electric company.

In total, CVPS spent $42,638 on lobbying last year.

“I think we’re very attentive to the business over there, including the legislation related to the merger,” Keefe said.

AARP, which has emerged as one of the most vocal opponents of a portion of the merger proposal, reported $129,818 in lobbying expenses. However, only $15,000 of that went to a lobbyist: It accounted for a portion of AARP in-house lobbyist Philene Taormina’s salary.

The rest? The organization reported $76,027 in television and print advertisements and spent the remaining $38,791 on direct mail, a telephone town hall meeting and fees to a lawyer arguing the organization’s case before the Public Service Board.

Those figures do not include the entirety of the organization’s advertising campaign, which called on the electric companies to return a disputed $21 million to ratepayers. As Seven Days previously reported, AARP’s extensive media campaign included close to $100,000 in television ad buys. But because many of those ads ran in April, the full cost of the campaign won’t be clear until the next filing.

Gov. Peter Shumlin, a staunch defender of the deal his administration cut with the merging utilities, has criticized AARP’s ad blitz, arguing that its simplified, populist message drowned out the merits of the merger. At a press conference two weeks ago, he called it an “out-of-state” media campaign designed to boost the national organization.

“You should ask AARP that, but I think you’ll find that they have this national policy and they have decided — and I say may, because I don’t know this as a fact — to use utility rates and mergers as a way of building support for AARP nationally,” Shumlin said. “I don’t think they’re just in here spending this money because they think the little state of Vermont is going to make a big difference.”

Indeed, AARP’s national headquarters announced last year a “multistate campaign” to help members “take action to fight utility bill increases.” AARP national spokeswoman Tiffany Lundquist said as many as 30 state chapters were engaged in utility regulatory or legislative fights, making use of a staff of three employees and other consultants who work on such issues. Lundquist cited recent fights in Colorado, West Virginia and Oklahoma, where AARP state branches won rate decreases.

“This is a really close-to-home issue for many older Americans who are frequently deciding whether to keep the light or heat on or pay for their medications,” Lundquist said. “This work can really make a difference.”

Greg Marchildon, AARP’s Vermont state director, says that while his organization’s fight against the GMP-CVPS merger may be part of a national effort to focus on utilities, it has been directed entirely within the borders of the Green Mountain State. He takes umbrage with Shumlin’s comments.

“That is the biggest bunch of hooey crap I have heard in the 20 years I have been doing this kind of work,” he said, arguing that his in-state staff of five was outmatched by the electric companies and the Shumlin administration. “The notion that somehow the governor has been outgunned by this big, bad out-of-state lobby is the stuff that comedy is made of. It would be funny if it wasn’t so cynical.”

Of course, gauging just how much money has been spent on persuasion and lobbying in the merger fight is a futile task. In addition to AARP, 17 other advocacy groups, trade associations, utilities, unions and businesses formally intervened in the merger’s Public Service Board case — and many of those outfits have lobbying power of their own in the Statehouse.

For instance, Vermont Electric Power Co. — the state’s transmission utility, whose ownership structure would be dramatically affected by the merger — reported $43,500 in lobbying expenses last quarter, a portion of which also went to MacLean Meehan & Rice. And the state’s community action agencies — which would receive $12 million in weatherization funding if Shumlin’s merger deal is approved — paid lobbyist Bob Stannard $20,000 for his work this legislative session.

Furthermore, while AARP included advertising expenditures in its disclosure forms, the utilities did not. Schnure and Keefe explained that while both underwrite Vermont Public Radio and Vermont Public Television, the resultant on-air announcements do not mention specific advocacy issues, such as the proposed merger.

Schnure said GMP spent roughly $37,000 last year on advertising and underwriting, much of which went to VPR. CVPS, meanwhile, spent $23,162 last year and $12,576 so far this year underwriting VPR and VPT.

GMPBillInsertMergerMar2011The utilities have found other ways to tout the virtues of the merger to the masses. Both CVPS and GMP have included color inserts with headlines like “GMP Offers New Benefits for CVPS Customers” in the bills they send every customer. Though the inserts argue that the merger will save customers millions and direct the reader to a pro-merger website, Keefe says they are “informational” in nature. As such, they do not have to be disclosed as issue advocacy and can be charged to ratepayers.

“We’re trying to get customers familiar with the new look and feel of the new company, so it’s something familiar, as opposed to, ‘Where did this come from?’” Keefe said.

Schnure agreed.

“We have an obligation and responsibility to keep customers informed about major developments affecting their electric service, which we do every month and have for decades,” she said.

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