Power to Rule the Roost: Utility Wires Legislature

This article originally appeared in Southern Exposure Vol. 7 No. 4, "Tower of Babel: A Special Report on the Nuclear Industry." Find more from that issue here.

These are not easy times for the Georgia Power Company. Or at least that’s what the company would like you to think. Since the early 1970s, the huge utility has faced steady, and often successful, opposition to its rate increase requests before the Public Service Commission (PSC). In 1977, the General Assembly, under pressure to do something to help the average ratepayer, created the Consumers’ Utility Counsel (C.U.C.) to represent consumer interests before the PSC, and a feisty opponent of utility abuses, attorney Sid Moore, was hired to direct its staff. 

Last year, the company lost a powerful ally on the Commission when a tough-talking young populist named Billy Lovett crushed PSC Chairman Ben Wiggin’s bid for a fifth term. This year, with Lovett browbeating his fellow Commissioners into submission, the PSC flatly denied the company’s request for a 17 percent increase, or $225.6 million more in revenues each year. Meanwhile, politicians around the state advance their popularity by taking potshots at Georgia Power, and legislators regularly introduce bills (though they rarely pass) to prove their sympathy for the beleaguered consumer. 

“The political pressure on us is enormous,” concludes a Georgia Power public affairs executive. Just countering the “legislative attack,” he says, has required an unprecedented lobbying effort. 

Having Georgia Power on the defensive is something a lot of people have waited to see for decades. “I detest those people because they get away with so much,” says one legislative observer. “They’re the most arrogant investor-owned utility in the South.” 

In the old days, Georgia Power seemed to glide along, almost oblivious to its detractors. Doubling in size every eight or 10 years, it had more than enough money to attract powerful friends in the 153 of Georgia’s 159 counties where it operated. By the 1950s, sociologist Floyd Hunter identified the company as “one of the three most powerful private institutions in the state.” 

Its clout continued to expand in the go-go years of the ’60s, with its dollars winning allies in nearly every segment of the community:

 • Revenues reached $295 million in 1968 ($1,475 million in 1978) and net income hit $41.5 million ($166.5 million in ’78), making Georgia Power the fourth largest non-financial corporation based in the state, behind Coca-Cola, Delta Air Lines and Southern Bell.

 • Income and property taxes paid by the company made it among the biggest sources of funds for the expansion plans of the state and dozens of counties.

 • With 6,680 employees in 1968 earning over $34 million in wages and salaries (12,067 employees and $202.5 million in payroll in 1978), the company was also among the largest job providers in the state.

 • Its construction budget of $ 141.4 million in 1968 more than equaled the combined expenditures of all new manufacturing plants in Georgia, giving the company phenomenal clout among contractors, building suppliers, etc. Since the company had a policy of using only union labor on construction jobs, it was also the largest plus in organized labor’s otherwise tenuous strength in the state.

 • In 1968, over $24 million went to banks — including many in Georgia — in annual interest payments for loans to the company (the figure hit $129 million in 1978); millions more went to stockholders of Georgia Power’s parent company, the Southern Company, which is also based in Atlanta.

 • A network of 100 local offices, 31 district offices and seven division offices kept the company highly visible throughout the 1960s (another 60 local and six district offices were added in the ’70s). With local managers taking an active part in civic affairs and tens of thousands of dollars flowing to local charities, the company had no problem finding all the friends it needed. 

With the inflation, over-expansion and money crunch of the early 70s all that changed. First to be squeezed out were the unions, as the power company began using only non-union contractors to build its new generating plants. The last to hurt were the bankers, since by law the company is guaranteed a “fair return” on its borrowed money and stockholders’ equity. In between the battle raged: organizations like the Georgia Power Project fought for consumer rights and public power (see Southern Exposure, Vol. I, No. 2) while the company fought back on many fronts, including setting up a miniature police force to spy on its opponents. 

Georgia Power no longer takes its many friends for granted. It is working hard to preserve its control and is lobbying with new vigor in the state legislature, a terrain once considered safely its own. 

Even before a Georgia Power lobbyist sets foot inside the legislature, much energy — and millions of dollars — go to create a climate favorable to the company. Georgia Power spends over four million dollars each year in public relations and advertising, more than any other utility in the country, according to an Environmental Action Foundation study. Donations to civic clubs, schools and charities approached a half-million dollars in 1978. Recipients include such groups as the Atlanta Area Boy Scouts and the Mount Vernon Christian Academy. In recent years, the company has given increasing attention to propaganda designed for school children. Its “Youth Activities and Education Services” budget reached $264,000 in 1978 and paid for employees to visit schools with specially prepared slide shows on electricity and power generation. In Macon, for example, a course on energy for ninth graders was introduced after a Georgia Power representative went to the Board of Education with “hordes of material” on electricity aimed at students. The company continues to provide free “educational materials” including films, slide shows and games, as well as “resource people” who give talks to the children at no cost to the school. 

Georgia Power’s programs to influence adult leaders are equally sophisticated. It maintains a list of 3,000 “movers and shakers” across the state who are informed regularly about the company’s plans. Company vice president George Edwards told the Wall Street Journal, “We try to contact everyone on the list at least twice a year. It’s important that they know what we’re doing because we need their support.” 

Georgia Power’s Industrial Development Department also wins favor among state leaders since its sole purpose is to attract new industry to Georgia. With a 1979 budget of $111,556 for advertising alone, it gets the message that “buildings cost less in Georgia” to a wide audience of “industrial prospects,” through ads in publications like Fortune, the New York Times and the Wall Street Journal. 

In addition to its industrial recruitment process, Georgia Power continues to make bankers happy with its policy of maintaining deposits in many banks across the state and drawing on them for loans. As it turns out, by winning friends among the banks’ boards of directors, Georgia Power also gains allies in the state legislature: a 1975 study by an Athens, Georgia, newspaper revealed that 20 legislators were directors of banks which loan money to Georgia Power. Fifteen of these men are still legislators: Claude A. Bray, Jr.; Frank Eldridge, Jr.; W.W. Fincher; James Render Hill; A.W. Holloway; Randolph C. Karrh; E.R. Lambert; James B. Lansford; Hugh Logan; Billy Milford; Sam P. McGill; Ben R. Ross; Terrell A. Starr; Loyce W. Turner; and Ebb Duncan. 

How Georgia Power spends over $2 million in legal fees each year also has a direct impact on its standing in the legislature. State Senator Don Ballard and State Representatives Benson Ham, Roy Lambert, Rene Kemp and Nathan Knight are all on retainer. Many other lawyers in the firms retained by Georgia Power are former legislators, city and county attorneys, mayors and former state agency officials. The bulk of its legal expense — $4 million in 1978 — goes to Georgia Power’s general counsel, the Atlanta firm of Troutman, Sanders, Lockerman and Ashmore. Partner Carl Sanders is a former governor (1963-67) and state legislator (1955-62), with numerous political appointees and allies still in political office throughout the state. With the help of money from Georgia Power operatives, Sanders tried to regain the governor’s office in 1970, but was defeated in a bitter primary by south Georgia’s Jimmy Carter. For several years thereafter, Sanders personally represented Georgia Power before the Public Service Commission, arguing that the company’s rate increases were essential not only to the welfare of its stockholders, but to the economy of the whole state. He now lets younger colleagues in his law firm handle the detailed arguments; but if the PSC does not give the company all it wants, Sanders has been known to take the case on appeal to the Superior Court of Fulton County personally, where some of his old cronies still preside. 

Georgia Power gains extra leverage in the legislature because members of Troutman, Sanders and its other law firms join company executives in making selective contributions to key candidates. Consider the 1978 reelection campaign of Fulton County representative Gerald Horton, chairman of the powerful House Industry Committee, which handles utility-related legislation. Georgia Power vice president and key lobbyist George Edwards contributed $200 to Horton’s campaign, vice president Bob Symonette and his wife gave $75, and Georgia Power president Robert Scherer donated $75. Troutman, Sanders associates gave a total of $950, including $100 from Carl Sanders, and lawyers from King and Spalding — another prestigious corporate law firm retained by Georgia Power — contributed $665. Horton received a total of $13,537 in campaign contributions of which $2,015 came from officials of Georgia Power and their two high-powered law firms. 

Inside the legislature, these contributions and the company’s various community relations programs pay off well for Georgia Power. Its lobbyists — who receive more in salaries than those of any other Southern electric utility — are careful not to disturb the company’s image of smooth efficiency with any overbearing arm-twisting. They are polished performers who know how to court the right legislator at the right time. Their lobbying strategy is two-fold: they work to get the “best” people appointed to the key legislative committees, especially the House Industry Committee and the Senate Public Utilities Committee, which handle all the public utility legislation for the General Assembly; and they concentrate on adjusting, killing or stalling a bill before it ever reaches the full committee or the floor of the legislature. The results are impressive. “No chairperson of either committee,” says a veteran lawmaker, “could be selected without the approval of the utilities. And no bills get out of committee without input from the utility lobby.” 

Georgia’s PSC: David vs. Goliath by Betsy Mahoney

The story that circulates among Georgia utility-watchers is that the Georgia Public Service Commission (PSC) has hit upon a new method of dealing with the mass of data Georgia Power turns out for each of its rate increase requests: they simply give the company half of what it asks for. Georgia Power, the story continues, now asks for twice as much as it really wants. 

Although the public continues to call for tighter control over utility companies, the Georgia Public Service Commission remains a circus-like jumble of confused commissioners who are more likely to be scoffed at by Georgia Power than feared. The surprising upset election of brash young Billy Lovett (who vowed during his campaign never to vote for a rate increase) to the PSC last year has created more internal bickering and publicity than concrete reform in the commission. Even Lovett’s assistant Judy Barrow admits that most PSC decisions “are made in the dark.” 

This handicap is not surprising since the Commission must regulate the state’s four natural gas companies, 43 telephone companies, 26 railroads and 2,000 bus and truck companies with a small staff that is ill-qualified and poorly paid. A survey by the Price Waterhouse accounting firm indicates Georgia ranks forty-eighth in the nation in per capita spending for utility regulation. 

Lack of support from the legislature contributes to the Commission’s ineffectiveness. The PSC has no access to the state computer system because the General Assembly has never provided them with a sufficient budget to make use of it. The 1979 legislature barely increased the PSC’s budget, much of which goes for salaries, and it turned down a number of PSC reforms, including one to give the Commission greater supervision of utility construction and development. 

The creation by the General Assembly of the Consumers’ Utility Counsel (C.U.C.) in 1977 to represent utility customers in hearings before the PSC has had limited benefits for Georgia ratepayers. Lawyer Sid Moore, who held the position until his resignation in September, openly opposed Georgia Power rate increases and the company’s continued construction of new generating plants. But the office, with its 14-member staff, has been no match for Georgia Power’s army of accountants and engineers with their voluminous computer data. The C.U.C.’s effectiveness is inherently limited because it must rely on the PSC for its figures, which in turn gets its information from Georgia Power. 

The PSC’s sad state of affairs became more noticeable when Georgia Power filed for a 17 percent rate increase last fall. After the PSC requested detailed information on some of the company’s financial operations – information necessary to evaluate the merits of the proposed rate increase – Georgia Power officials, in a well-publicized move, dumped 600 pounds of financial data in the Commission’s offices and told the PSC to do the necessary calculations themselves. The PSC responded by denying the rate increase entirely. 

Former governor Carl Sanders, whose law firm represents Georgia Power, personally led the appeal of the decision in Fulton Superior Court. Supporting the company, the judge sent the case back to the PSC, which then decided to give Georgia Power $122.9 million, or slightly more than half the $220 million requested. 

What has all this meant for Georgia consumers? First, Georgia Power is earning the highest rate of return of any of the member firms of the Southern Company, Georgia Power’s parent firm: 12 percent (the state limit is 12.2 percent). Second, Georgia Power is carrying out a massive construction schedule which has created an excess generating capacity of about 20 percent, and resulted in the company’s attempts to sell some of its generating plants to utilities in other states. Finally, Georgia Power continues to dominate the Georgia political economy with its extensive lobbying efforts, real estate holdings, public relations schemes and industrial development efforts. A weak and divided PSC seems to serve the company’s interests more than those of the citizens it is supposed to protect. 

A lobbyist for a senior citizens organization noted the intensity and concentration that underlies the seemingly low-keyed approach of Georgia Power. “I watched vice president George Edwards almost daily. He was very selective, putting power in the right places. It was a quiet, careful approach. When it [a particular bill] came down to the floor [for a vote], there wasn’t much pressure. They had already done their homework. The stage was set.” 

Considering the average lawmaker’s ignorance of utility issues, one of the power company’s chief assets is its ability to provide the members of the utility committees with technical information to support their case. “I think you’d be stretching it to say that even committee members know much about utilities,” confesses one senator. Consequently, the company can overwhelm its opponents with data and rely on a general “aura of credibility,” as Sid Moore calls it, to convince enough lawmakers to go along with their arguments. A House legislative aide acknowledges that Georgia Power’s lobbyists “are very good at getting ideas across, due to their technical information. They get more technical information in a few hours than the legislative staff can get in days. They’re very thorough.” 

The technical sounding data may be impressive to some legislators, but most consumer lobbyists are unpersuaded. “They don’t come in with accurate information,” says consumers’ utility counsel Sid Moore. “They have things well-typed and they talk smoothly.” But in the end, the smooth talk, laced with numbers, adds to a residue of goodwill the company built up before rates began soaring and the instant verification that comes with the flick of a light switch — it’s all enough to convince most legislators to give Georgia Power its way. And those who sit on the committee overseeing legislation related to utility operations are often the most willing to be convinced. “We don’t think the power company should be harassed,” says one member of the Senate Public Utilities Committee. “You are faced with a society of people who are against utilities. You have to balance what they want to do with what is practical.” 

The value to Georgia Power of having members on the key committees who maintain such a protective attitude was vividly illustrated in the handling of Senate Bill 238 in 1978. The measure, introduced by flamboyant Senator Roscoe Dean of Jessup, an outspoken critic of utilities, would have limited the utilities’ use of the fuel adjustment clause. The bill was voted down by the Public Utilities Committee four to one (Dean cast the only positive vote), but the committee did pass a weakened substitute. Dean managed to get his own bill reintroduced on the Senate floor, and when the Committee’s version was rejected, Senate Bill 238 passed 47-4. Significantly, three of the four negative votes came from Public Utilities Committee members. (Another abstained from voting.) The bill then went to Gerald Horton’s House Industry Committee. Despite Dean’s vigorous objections, Horton’s committee stalled the bill until the next-to-last day of the session; the Committee then voted out an amended version of the bill that was so watered down that when it went back to the Senate, that body refused to ratify it. So, despite strong support for the bill, Georgia Power’s allies in the House were able to kill it. 

During the 1979 session, Georgia Action, a low- and moderate-income citizens’ organization, managed to get the legislature to write into law a uniform “shut-off’ policy it had pressured the Public Utilities Commission into establishing for the turning off of consumers’ power and telephone service. Another bill passed empowering the PSC to conduct pre-hearing discovery (the right to collect testimony and evidence before the hearing begins); but what the General Assembly gave with one hand, it more than took away with the other. The PSC’s budget was barely increased, making the possibility of using the full power of discovery remote. The legislature also refused to grant the PSC funds to conduct management studies of Georgia Power and Savannah Electric, or to extend the life of the C.U.C. beyond July, 1980; hence, neither body has the capability to evaluate the barrage of computer-generated data Georgia Power churns out (see sidebar). Finally, the legislature passed an Election Reform Bill, pushed hard by Georgia Power and Southern Bell, that would allow companies to form political action committees (PACs) to make campaign contributions to candidates. Under strong pressure from Common Cause and others, Governor George Busbee ultimately vetoed the bill. But now a special legislative study commission is considering recommending that the PSC become an appointed body instead of an elected one. Such legislative action, already endorsed by the Atlanta newspapers and rumored to have the governor’s support, would protect Georgia Power from candidates like Billy Lovett who win mass support by promising, as he did, to “never vote for a rate increase.” 

The cozy relationship between the key legislative committees and the utilities became all too apparent at the end of the 1979 session when Gerald Horton announced his resignation as state representative and chairman of the House Industry Committee to accept the position of Director of Governmental Affairs for the Georgia Power Company. Horton, who was considered a “liberal” by legislative standards, now has an office on the plush top floor of the Georgia Power office building and receives a salary rumored at $70,000 per year; he directs the company’s community, industrial and legislative affairs within its larger Department of Public Information. 

With public pressure mounting against the Public Service Commission’s approval of rate increases, and maverick candidates like Billy Lovett rising from nowhere to win seats on that agency, Georgia Power is obviously looking to other arenas to protect its interests. The legislature is at the top of the list. As Gerald Horton explains, the PSC is “politically incapable” of making “reasonable” decisions because it is under strong pressure from the public to keep rates and utility expansion at a minimum. The legislature, he and his new employer believe, will be more “practical” in deciding what’s best for the company, the consumers and the state. 

Georgia Power can be expected to increase its emphasis on influencing legislative decisions, from the procedures for choosing PSC Commissioners to the definitions of what expenses may be included in rate increase applications. And if the company succeeds in getting the General Assembly to harness the PSC and give the utilities what the PSC won’t, Georgia Power — a public utility — will achieve its final goal: to become, in effect, self-regulating — a private monopoly in complete control of its own destiny.