Consumers Energy agrees to stop dark money donations for two years | Michigan Radio
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Consumers Energy agrees to stop dark money donations for two years

Jan 29, 2019

Screen grab from a video on a CEME-managed website to influence energy legislation in Michigan.
Credit CEME

Consumers Energy has agreed to stop giving money to non-profit political advocacy groups for two years, under the terms of a rate case settlement agreement with the Michigan Public Service Commission.

That's after the state's largest utility gave more than $43 million between 2014 and 2017 to a controversial dark money PAC to oppose issues and defeat political candidates it did not like.  

"Dark money" refers to groups formed under sections 501(c)(4) and 501(c)(6) of the tax code. Generally, they're not required to publicly disclose their donors. The 501(c)(4) group that Consumers Energy gave money to was called Citizens for Energizing Michigan's Economy (CEME).

Matt Kasper is with the utility watchdog group, Energy and Policy Institute. He didn't expect the commission to demand the step, calling it unprecedented, but agrees it was the right move. He says other states have the same problem with regulated utilities using money to influence politics out of the public eye.

"It won't be surprising to me if we see advocates or intervenors in other states take this precedent by the Michigan Public Service Commission, and try and replicate that," says Kasper. "Maybe in Arizona or Florida or other states where you have large monopoly electric companies spending millions of dollars to influence races."

The utility says the money it gave to CEME came from investors - not customers. But Kasper says it's disingenuous for the company to try to separate the profit it makes from customers from the money it receives from investors.

The utility also says its political spending is done to support policies that are in the best interest of its customers.

Meanwhile, a complaint against the dark money group, CEME, is pending before the Internal Revenue Service. 

Patrick Anderson, CEO of Anderson Economic Group, filed the complaint.  He says CEME is not involved in social welfare issues as required under its 501(c)(4) tax-exempt status, but rather, does “express advocacy” for or against certain candidates. 

In 2018, CEME paid for attack ads against then-State Representative Gary Glenn. Glenn supported deregulating the electric utility industry in Michigan completely, a move which Consumers Energy opposes.

Glenn lost his seat to a Republican opponent in the primary, the result, he says, of CEME's involvement.

Anderson says CEME has essentially admitted it violated the law, by voluntarily paying what's called a "proxy tax" in 2017. A proxy tax is a tax penalty assessed against organizations that are mostly tax exempt, but may have to pay taxes on funds used to pay for lobbying activities.

Anderson says Consumers Energy may also have violated the law by donating to the group.

Editor's note: Consumers Energy is one of Michigan Radio's corporate sponsors.

CORRECTION: A previous version of this story misspelled Matt Kasper's last name. The post above has been corrected.