Though I take some pride in my critical reading skills and resistance to getting snookered by scam stories, I fell for a doozy yesterday. Unfortunately, I ended up propagating what might have been a clever ruse designed to paint nuclear energy advocacy in a bad light. It’s a story worth telling after I apologize profusely for the disinformation I shared.
Here’s the short version. A muckraking web site published a story condemning Exelon for banking a generous return on its investment in lobbying, plant acquisition, and public relations related to New York’s Zero Emissions Credit (ZEC) program. Supposedly, a man working as a lobbyist for Exelon during the time when it was seeking implementation of the ZEC had bragged about the impressive profitability of the campaign.
The story was clearly aimed at stoking feelings of betrayal by political maneuvers that provide profits for big, well-connected companies at the expense of captive rate payers.
I accepted the story at face value and publicly wondered if unpaid advocates like me had been used in a high stakes game.
Sobering reading for someone who paid out of pocket to travel to Albany to support the NYPSC's ZEC plan for upstate nuclear in New York.
Were we played? https://t.co/rQY4khsuaF
— Rod Adams (@Atomicrod) March 28, 2018
Unfortunately, there was a lot that the story did not reveal. The numbers included in the story were deceptive, and their source was a man with deep conflicts of interest. I’m sorry I shared it without first performing some due diligence.
Here’s a longer version of the story.
One of my Google Alerts that keeps me abreast of news about nuclear energy contained a link to a story titled Exelon lobbyist bragged about profitability of Cuomo’s nuclear bailout. It appeared on a site called Eyes on the Ties.
The title intrigued me because I had a tangential relationship to the story. In fact, the most recently published story here includes a photo of me and some friends celebrating the zero emission credit (ZEC) decision by the New York Public Service Commission. That decision, which opponents and competitors call “Cuomo’s nuclear bailout” is credited with restoring reliable profitability to four nuclear units (R.E Ginna, James FitzPatrick and Nine-Mile Point (2 units)) located in upstate New York.
By keeping productive and emission free nuclear plants viable, the decision has likely saved rate payers a considerable amount of money. If those nuclear plants had been forced out of the market, the supply-demand balance in the natural gas market would have titled more favorably towards the suppliers and given them more frequent periods when demand exceeds available supply.
Periods of scarcity allow suppliers to rapidly raise prices and provide bursts of high profits for speculators.
Competitors have been strongly opposed to the state intervention, claiming that the credits interfere in the normal functioning of markets to eliminate excess capacity. They fail to admit that the existing market ignores substantial differences in quality between various sources of electricity.
A coalition of power producers, fuel suppliers and trade associations even filed a lawsuit against the state. The suit challenges New York’s right to use the ZEC, calling it interference in federally regulated wholesale power markets. Politico did a credible job of illuminating the complex interplay of relationships and policies involved in the struggle.
So far, courts have upheld the program as a legitimate effort by the state to pursue efforts to protect the environment by recognizing that emission-free electricity is more valuable than electricity produced by burning hydrocarbons and releasing CO2 into the atmosphere. Even the Natural Resources Defense Council (NRDC), which doesn’t like the fact that the ZEC helps keep nuclear plants in the black, has supported New York’s right to implement the program.
That brings us to yesterday’s dirty trick and my involvement in spreading it. According to the tale told by Eyes on the Ties, they had obtained a presentation that included a rare admission by a lobbyist about the generous Return on Investment (ROI) obtained by a specific successful lobbying effort.
While it is widely understood that corporations get a good return on investment for the money they spend on political influence operations, it is rare for them to openly brag about how lobbying dollars translate into public subsidies and profit. In a presentation obtained by PAI, one lobbyist did just this, boasting about the returns one of his clients, Exelon, obtained as part of New York State Governor Andrew Cuomo’s controversial nuclear power bailout.
The tale was pretty damning. A man named Michael Krancer, who was described as a former Exelon lobbyist, claimed that Exelon had earned a 750% return on its investment in successfully advocating for the ZEC. He made the claim at the March 2017 conference of Pennsylvania oil and gas producers. The context of the claim was a marketing presentation designed to sell the services of his firm Silent Majority Strategies, LLC.
As portrayed by Eyes on the Ties, the “obtained” presentation provided an insider peek at the generous returns obtainable when corporations invest in political activities.
However, Michael Krancer was NOT an active lobbyist for Exelon. He had worked for the company as a lawyer from 2007-2010 when he was appointed as Secretary of the Pennsylvania Department of Environmental Protection. His stint in that job was praised by oil and gas companies working to develop the Marcellus Shale and sharply criticized by individuals and organizations who were concerned about the pace of the development.
Though he performed some additional work as a lawyer on retainer for Exelon through the summer of 2015, he has not worked for the company since then. Apparently on his own accord, he registered as a lobbyist for Exelon in Pennsylvania, but has not been employed by the company in that role.
Instead, he has been representing the interests of oil and gas producers first as the chair of Energy, Petrochemical and Natural Resources Practice for Blank Rome, an influential Philadelphia law firm, and later as a principal in Silent Majority Strategies, LLC.
Remember, Pennsylvania oil and gas producers are a part of the coalition of competitors that would like to see the ZEC program overturned by the courts. They want nuclear plants to close. Once the nuclear plants have been permanently eliminated as competitors, there will be a substantial increase in the demand for their product. They will see improved profits from both increased sales and increased prices due to more frequent periods of scarcity.
Though Krancer may or may not have been the source that provided Eyes on the Ties a copy of his year-old marketing presentation to Pennsylvania oil and gas producers, he certainly is in the list of suspects.
It’s conceivable that the presentation was released with the goal of planting a story that might influence on-going deliberations of a three member panel of the U.S. Court of Appeals for the Second District. That panel heard oral arguments on March 12 in an appeal of the decision by the U.S. District Court for the Southern District in the case of Coalition for Competitive Electricity v. Zibelman.
Affected parties are keenly interested in the decision that the panel will make.
The decision by the three-judge panel will very likely provide the final say on the validity of New York’s Zero Emissions Credit Program under federal law. Even more importantly, the Second Circuit decision will be binding in future federal court cases within the region (which includes New York, Connecticut, and Vermont). The state is currently considering supporting offshore wind through the issuance of contracts that, like Zero Emissions Credits, compensate the generators for their lack of harmful emissions and other benefits that they provide above and beyond the energy and capacity they produce.
The decision will also be one of the first circuit court decisions to interpret the meaning of the Hughes case, setting a precedent that could influence the ability of states across the country to combat climate change and dangerous pollution emitted by power plants. Fortunately, the law is on the side of New York and states’ authority to direct the development of renewable energy.
If competitors can’t win in a fact-based battle for public opinion or in the courts, they might sometimes resort to ruses and dirty tricks. I hope that the effort has as much chance of success as a “hail Mary” pass from beyond the fifty yard line.
In the future, I will be more careful about checking before I help to propagate the deception.