Deregulation Keeps Lobbyists Going... and Going...
Janee Breismeister and Reggie James of the Consumers' Union(l), and John Hildreth of the Coalition for Affordable Power-Texas(r)
Last session, the gravy train for lobbyists and consultants was casino gambling. This year, it's electricity deregulation. Hundreds of lobbyists have signed up to fight over the issue, and numerous consultants in Austin and elsewhere are collecting handsome fees for media advice and strategy.
The Texas electricity market is the largest in the country. In 1994, Texas electric producers sold about 258 billion kilowatt hours of electricity, worth $16.5 billion. So it's not surprising that the companies supporting and opposing deregulation are spending millions of dollars on lobbyists to represent their interests.
There are more than two sides in the electric fight. But the two main groups break down like this: proponents of deregulation are aligned in a group called the Texas Coalition for Competitive Electricity (TCCE); deregulation opponents are headed by the Association of Electric Companies of Texas (AECT), a trade group which represents the state's investor-owned utilities. The combined assets of the seven members of AECT total more than $70 billion, and their combined sales exceed $20 billion a year. That kind of money buys high-voltage advice. Peggy Venable, director of Citizens for a Sound Economy (see sidebar), says "Any lobbyist or public policy analyst that can be bought, the utilities have bought."
Shortly after the last session, AECT scored a coup by convincing Curtis Seidlits, a respected former legislator from Sherman, to quit the Lege and become the head of their lobby effort. Seidlits reportedly took a five-year, no-cut contract with a salary of $250,000 per year, a significant raise from the $7,200 a year paid to Texas legislators. He now oversees a fleet of hired-gun lobbyists, including Reggie Bashur, a former aide to Gov. George W. Bush, former state senator Kent Caperton, longtime lobbyist Buddy Jones, and John Hall, who in less than two years has been transformed from the head of the Texas Natural Resource Conservation Commission into one of the highest-paid lobbyists at the Capitol. According to filings with the Texas Ethics Commission, in addition to AECT, Hall's clients -- all of whom pay him between $50,000 and $99,999 -- include Diamond Shamrock Refining & Marketing, Fina Oil & Chemical Co., Lower Colorado River Authority, Pedernales Electric Cooperative, Inc., and Waste Management of Texas, Inc. One consumer advocate says of Hall's experience in state government, "his training may prove very expensive to the taxpayers." In all, AECT has 12 lobbyists, including Seidlits and Hall, on the payroll.
To fight deregulation, AECT can also call on dozens of other lobbyists, who work for its members. Dallas-based Texas Utilities (TU) has nine lobbyists under contract, including former House Speaker Billy Clayton and Mayor Bruce Todd's father-in-law, George E. Christian. (TU has made it known it would like to buy Austin's publicly-owned utility). Houston Lighting & Power has 21 registered lobbyists. New Orleans-based Entergy has 16.
AECT has also hired Public Strategies Inc. (PSI), an Austin-based consulting firm, to help develop media and lobbying strategy on the deregulation issue. PSI may be the best-connected firm in the state. Headed by Jack Martin, a former aide to U.S. Senator Lloyd Bentsen, the firm also has media and campaign whiz kid Mark McKinnon, White House refugees Jeff Eller and Paul Begala for national expertise, and former Capitol lobbyist Jack Gullahorn to provide statehouse savvy.
AECT used local consultant Greg Hartman, who works for MGT of America, to produce a report released last month which argued that deregulation would cut state and local revenues by a minimum of $234 million per year. Economist Jon Hockenyos, managing director of Texas Perspectives, is on retainer to AECT and is providing research and analysis to the group. (Hockenyos and Hartman are also associates of Todos, the business alliance Mayor Todd formed with his wife, Elizabeth Christian, last spring).
The Coalition for Affordable Power-Texas (CAP-Texas), whose interests in opposing deregulation are virtually identical to those of AECT, has one registered lobbyist, John Hildreth. The former director of the Southwest regional office of Consumers Union, Hildreth left the group last May to become the president of CAP-Texas. Said one consumer advocate of Hildreth's move, "It really hurts when the other side picks off one of the people that you thought was a stalwart for consumers."
But Hildreth says, "I didn't switch my position on this issue." He says that while with Consumers Union, his position was that "deregulation should only occur if it's fair to all classes of customers." He says that with CAP-Texas he is "working from a different perspective and it's a broader perspective than just residential consumers. We should take a very cautious approach to it, do it right and learn from the experience of other states before we determine if we should do it in Texas."
Tom "Smitty" Smith of Public Citizen,(l), and Peggy Venable, head of the Texas office of Citizens for a Sound Economy (r)
One of the world's biggest power companies, Enron Corporation, is not aligned with either AECT or TCCE. That's because Enron is staking out its own territory in the power business, and its interests don't align exactly with the pro-deregulation forces of TCCE. While Enron, one of the world's largest natural gas marketers, would benefit from selling power in a deregulated world as an electricity marketing business, it also has one foot in the environmental camp, with interests in alternative energy sources. It moved recently into the solar power business with a big installation at the Nevada Test Site, and it recently bought Zond, America's biggest wind power company. Enron will field 20 lobbyists, including former city attorney Diana Granger, who now works at the Austin office of the law firm Akin Gump Strauss Hauer & Feld.
While big industry has hundreds of lobbyists working on the issue, consumer and environmental groups, who recently pulled out of talks with legislators on drafting a bill calling for deregulation (See "Shock to the System" this issue), will have less than a dozen lobbyists working the halls of the Capitol. The Texas office of the consumer group Public Citizen will rely on Tom "Smitty" Smith for its lobbying effort. Consumers Union's team includes Reggie James, Janee Breisemeister, Kathy Mitchell, Robert Schneider, and Elizabeth McGiffert. The Sierra Club has two registered lobbyists, but electric deregulation is a back burner issue for the group. And the Texas Renewable Energy Industries Association, which pushes renewable energy, has one lobbyist, Russell Smith.
The Texas office of the Environmental Defense Fund (EDF), one of the country's biggest environmental groups, has four registered lobbyists -- Jim Marston, Karl Rabago, Joe Woods and Adrian Saenz. Marston, who directs the Texas EDF office, acknowledges that consumer and environmental groups are outgunned at the Lege. But he remains optimistic that they will be able to have an impact. "We are trying to create strategic alliances," he said. "And hope that if it's a close fight, we can tip the balance one way or the other."