While Touting Green Power, Democrats Arrange Duke Energy Backup Loan
By Kristen Lombardi
The Center For Public Integrity
Democrats have turned to Duke Energy Corporation for a $10 million line of credit for their 2012 convention, an alliance that poses the appearance of a double standard for an administration that pledges a green energy strategy.
Many Democrats and the Obama administration have vilified coal, urging a move toward cleaner energy. Today, the Environmental Protection Agency has proposed stricter controls on mercury and other toxic air pollutants from power plants burning coal, one of many rules proposed by the agency that take aim at coal pollution.
Duke is the nation's third largest coal-burning utility, thriving on the black rock to generate electricity in five states. It has vowed to shut down rather than clean up operations at some of its coal-fired plants. Nearly half the company's plants are coal, and it hasn't built a nuclear facility since 1985. Solar, wind, and other supposedly green "bio" technologies account for only 9 percent of Duke's power generation.
Yet Democrats didn't hesitate to accept Duke's offer to secure a $10 million line of credit for their presidential nominating convention in Charlotte next year, despite a $100,000 limit on individual and corporate contributions. And Duke's CEO, James Rogers, is leading the effort to raise $36.6 million to underwrite the event.
Some environmentalists are distressed by the Democratic Party's apparent double-standard when it comes to Duke. "It seems promises and assurances don't mean much," said John Blair, of the Indiana-based Valley Watch, which has battled Duke Energy over its environmental record in the past.
The Obama administration professes a different energy agenda, promoting the use of renewable and cleaner-burning fuels than oil and coal. Yet Energy Secretary Steven Chu, testifying before a House subcommittee on Tuesday, not only stood up for strengthening the nation's nuclear industry but also urged support for the full mix of alternatives to traditional coal-burning. "The administration believes we must rely on a diverse set of energy sources, including renewables like wind and solar, natural gas, clean coal, and nuclear power," Chu said.
It's not the first time Democrats have embraced Duke Energy. The company is among at least a dozen polluting firms the Obama administration has given blanket exemptions from basic environmental oversight so they can pursue energy projects paid for by stimulus tax dollars, as documented by a Center for Public Integrity investigation last year. The Center's November story detailed how the administration has awarded more than 179,000 exemptions known as "categorical exclusions" to stimulus projects funded by federal agencies, freeing those projects from normally required review under the National Environmental Policy Act, or NEPA.
The Energy Department -- which handed out NEPA exemptions to recipients with some of the nation's worst environmental compliance records -- has funded a $21.8 million wind farm project in Texas, as well as a $204 million electrical grid upgrade project in five additional states, undertaken by Duke Energy. The department granted the NEPA waivers to both Duke projects even as the company continued its decades-long defense against two of the biggest air-pollution cases in the nation's history.
Observers say the company often gets what it wants because of Rogers, its CEO. Rogers served as co-chair of the Charlotte 2012 organizing committee that wooed the Democratic National Convention to his company's hometown. He made political contributions of $120,600 to Democrats since 2007, including $33,100 to President Obama's campaign; he also gave $44,400 to Republicans.
Duke Energy Corporation's PAC, by contrast, contributed $259,900 to Democrats and $209,000 to Republicans over the last two years.
Duke spokesman Thomas Williams says the energy corporation agreed to provide the DNC a "letter of commitment" that can be turned into a letter of credit and used by the host committee "for cash flow purposes" for the event. It assures the DNC that they can guard against a cash shortfall if they fail to receive the promised contributions. He says the committee may or may not tap into the credit line, and it has "never not paid its debts, I understand."
The backup financing was a sweetener offered by the 2012 organizing committee -- supported by both North Carolina Democrats and Republicans, Williams notes -- in an effort to win the competition to host the convention. "It was something we provided as part of the effort to land the DNC," he adds. "We've been supportive of that effort in any way we can."
For environmental advocates, like Blair, Rogers' involvement in the DNC can only help Duke in seeking energy subsides from the Obama administration -- something he says Rogers referenced at a December 2010 meeting between the CEO and Indiana opponents of the company's controversial new "clean coal" plant in that state. At the meeting, Blair remembers asking Rogers where Duke would get the money to fund a carbon capture and sequestration experiment at the facility.
"He said, 'Well, I'm meeting with President Obama ... and I expect the federal government to pay that bill,'" Blair recalls Rogers saying. "Now, here's this $10 million."
Other advocates privately say they see the move as an attempt by Duke to curry favor with the party controlling the White House. After all, there's a long list of pending federal environmental rules that would have a direct impact on the utility industry -- regulating against greenhouse gas emissions, for instance, and classifying coal ash as a hazardous waste.
Duke Energy has already been linked to three of nearly 140 "damage cases" identified by the EPA and environmental groups nationwide where coal ash, the waste byproduct of burning coal to produce electricity, has tarnished groundwater and harmed the ecology.
Today, the EPA is issuing a new draft rule to curb mercury and other air toxic emissions from coal-fired power plants, which the utility industry has long fought. Edison Electric Institute, which represents the interests of Duke Energy and other utilities like American Electric Power and Southern Energy, has been advocating against the EPA mercury rule on Capitol Hill, according to environmental advocates. A range of companies relying on coal-produced electricity have also been complaining -- about the proposed coal ash rule especially -- adding to a tense relationship between the president and some of the nation's businesses.
Williams dismisses speculation about Duke's motives as "fundamentally wrong." He says the company has long worked to boost economic development in Charlotte, and its latest DNC effort reflects that tradition. "Duke is doing this to promote Charlotte and our region, where we do business," he says.
"We're all very proud of what we've accomplished," Williams adds, "and we're going to put on a great convention."
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First Posted: 03/17/11 10:59 AM ET Updated: 05/25/11 07:40 PM ET