Responding to dark money controversy, NextEra did internal investigation into FPL
Revelations about Florida Power & Light’s involvement in a dark money scheme prompted questions from Wall Street and an internal investigation from its parent company.
Recent revelations about Florida Power & Light’s involvement in a dark money scheme to siphon votes away from Senate Democratic candidates prompted its parent company to conduct an internal investigation, NextEra announced at an earnings call on Tuesday.
NextEra Energy CEO James Robo responded to a question from a Bank of America Securities analyst and said the company had FPL CEO Eric Silagy turn over emails and text messages and concluded there was “no evidence...of illegality or wrongdoing on the part of FPL or any of its employees.”
FPL’s relationship with two political nonprofit committees — “Grow United” and “Let’s Preserve the American Dream” — has come under recent scrutiny as part of a criminal investigation by the Miami-Dade County state attorney into a ghost candidate scandal. The non-profit committees were set up by political consultants working for FPL who had consulted with Silagy, according to reporting by the Orlando Sentinel, the Miami Herald and the Florida Times-Union.
Internal documents obtained by the Sentinel show that Silagy used a pseudonym email “Theodore Hayes” to communicate with consultant Jeff Pitts, who controlled Grow United, with the memos noting that one goal was to “minimize all public reporting of entities and activities.”
The documents also showed that Silagy coordinated with the political consultants to steer campaign contributions made through nonprofits in past elections.
Court documents obtained by the Miami Herald, as part of the state attorney’s investigation, have shown that as part of
the ghost candidate scheme Let’s Preserve the American Dream paid former state Sen. Frank Artiles $125,000 for “research” and paid Grow United $1.15 million.
Artiles is facing several felony charges for allegedly recruiting and paying an auto-parts dealer who shared the same surname as the Democratic incumbent in the race for Senate District 37 to run as a no-party candidate and “confuse voters and influence the outcome” of the 2020 election, according to his arrest affidavit. Artiles has pleaded not guilty to the charges.
Republican Ileana Garcia won the election by 32 votes. The no-party candidate, Alexis “Alex” Rodriguez, who did not campaign, received more than 6,000 votes. Rodriguez has pleaded guilty and agreed to cooperate with prosecutors.
The reporting also found that the same FPL consultants have been involved in setting up front groups to advance FPL’s political agenda, and paid activists to promote FPL’s interests.
For example, Richard Alexander, who lives in Cullman, Alabama, not only chairs Grow United, he also has been tied to groups that were created to promote the agenda of Florida’s powerful sugar and electric utilities industries, according to the Orlando Sentinel. He also was instrumental in the 2019 political campaign against the so-called “energy choice” petition drive, which was opposed by FPL and other utilities.
The papers also reported that a member of the Jacksonville City Council who didn’t want to sell the city’s utility company to FPL was offered a job that was arranged by consultants for FPL in an unsuccessful attempt to get him to resign from the commission.
In response to the stories, FPL has repeatedly denied any wrongdoing.
On Wednesday, FPL spokesperson Chris McGrath denied that FPL was involved in the ghost candidate scheme.
“We take all allegations seriously, and we’ve found no evidence that either FPL or our employees had any involvement in, financially supported, or directed any third party to support ‘ghost’ candidates during last year’s Florida election cycle,” he said.
On Tuesday, it became clear that Wall Street had noticed the stories.
CALL WITH ANALYSTS
At NextEra’s fourth-quarter earnings call with financial analysts, Julien Patrick Dumoulin-Smith of Bank of America Securities asked Robo if he could “share around some of the headlines pertaining to FPL here? I know there’s been a lot of back and forth and perhaps there’s a lot of context to provide there.” Dumoulin-Smith is director of U.S. Power, Utilities and Alternative Energy Equity Research for Bank of American Securities.
Robo responded: “Sure, Julian, I think you know, on some of the Florida political headlines I think what I’d like to say on that is pretty simple.”
He said that when the company “received the report and and those allegations that have been in the press, we conducted a very extensive and thorough investigation that included looking at company financial records and include looking at everyone who was named and its company emails.” He said those involved “all provided access to their personal emails and texts to us as part of that investigation.”
He concluded: “The bottom line is we found no evidence of any issues at all, any illegality, or any wrongdoing on the part of FPL or any of its employees.”
Robo added that he felt “very good about the investigation that we did, and I feel very good that there is, you know, no basis to any of these allegations. So, that’s probably all that we’re going to say on that today.”
At the end of the earnings call, Robo announced he will be retiring from his position on March 1 and John Ketchum, currently president and CEO of NextEra Energy Resources, will succeed him. It was also announced that Silagy, the president and CEO of FPL, will take on the added responsibility of chairman of FPL.
REGULATORS ASKED TO TAKE A LOOK
Earlier this month, the reporting by the Orlando Sentinel, Florida TimesUnion, and the Miami Herald, prompted four Democratic lawmakers to
‘‘
WE’VE FOUND NO EVIDENCE FPL OR OUR EMPLOYEES HAD ANY INVOLVEMENT IN, FINANCIALLY SUPPORTED, OR DIRECTED ANY THIRD PARTY TO SUPPORT ‘GHOST’ CANDIDATES DURING LAST YEAR’S FLORIDA ELECTION CYCLE.
FPL spokesman Chris McGrath
ask state regulators to conduct an audit of FPL, the largest utility company in the nation and a monopoly regulated by the Florida Public Service Commission.
In a Jan. 5 letter, they asked the commission to determine whether the company was using ratepayer money for political purposes.
“This reporting has raised significant questions around the potential of ratepayer funds being used to not only influence elections but to undermine democracy through fake candidate schemes, astroturfing, and attempted bribes’’ wrote state Reps. Anna Eskamani, Carlos Guillermo Smith, Angie Nixon and Travaris McCurdy.
A day later, PSC Chairman Andrew Fay responded with an unequivocal rejection of their request, saying that the PSC “has a long-standing prohibition on the inclusion of lobbying and other expenses, which have been determined to bring no benefit to ratepayers, among the expenses to be recovered through rates charged to the public for service.”
Fay added that when FPL filed its rate request, “the appropriate auditing function was conducted during the commission’s consideration of the most recent FPL rate case,” and the audit “produced no evidence” that FPL “used, or was intending to use, ratepayer funds for the private benefit of the company’s lobbying, campaigning or marketing affairs.”
The legislators responded on Jan. 10, saying they considered the PSC’s review incomplete given the news stories.
They cited the utilities expert, Karl Rabago’s testimony in the rate case, in which he noted that
FPL spent millions of dollars in dues paid to certain politically active trade associations and cited the PSC’s own documents in the rate case.
“FPL’s response as well as the statements provided for the docket by the staff involved in the rate case audit, leave many questions and concerns for our constituents and Floridians at large,” the legislators wrote.
They asked if the PSC’s review was enough.
“Are Floridians expected to simply believe that the standard rate case process results are comprehensive and fully accurate, especially given how much detail is left out of the public eye…?” they asked.
They then asked the
PSC to supply answers to a series of questions about FPL’s political spending that included:
How was the $14 million FPL spent in 2018 on a nonprofit called “Mothers for Moderation” used and was any of it passed “to other organizations at FPL’s direction or with FPL’s knowledge?”
Where did the $4 million paid by FPL to consultants working with Grow United, the nonprofit organization that funded the ghost candidate advertising, originate from and what was it spent on?
Has FPL ever given money to another nonprofit who worked with the consultants Let’s Preserve the American Dream?
Can the PSC provide a complete list of 501(c)4 social welfare organizations that FPL has provided funding to over the past five years?
On Monday, PSC Executive Director Braulio Baez responded that it’s not the PSC’s job to answer those questions and suggested that the questionable expenses come from shareholder funds, not ratepayers.
“Simply put, the PSC is charged with ensuring that the rates charged to customers by a utility are fair, just and reasonable, and that those rates are set at levels sufficient to recover only the prudently incurred costs to provide service,” Baez wrote.
He said that federal rules prohibit the PSC from including political expenses in the rate base and the company did not include these expenses as part of their supporting documentation and concluded “that rates are not based upon costs for such prohibited purposes.”
Baez also defended the PSC’s use of sampling as a means of auditing FPL’s expenses, saying it is “common in all disciplines that use large amounts of data.”
Eskamani of Orlando said Baez’s response left her unsatisfied.
“It’s frustrating to see the Public Service Commission express no interest or concern in Florida’s largest investorowned utility company engaging in questionable smear campaigns and potentially illegal election activity while they increase rates,’’ she said Wednesday. “It begs the question of who the PSC serves — is it Floridians or is it utility companies?”