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Ties to Obama Aided in Access for Big Utility
By ERIC LIPTON
Published: August 22, 2012 69 Comments
WASHINGTON â€” Early in the Obama administration, a lobbyist for the Illinois-based energy producer Exelon Corporation proudly called it â€śthe presidentâ€™s utility.â€ť And it was not just because it delivers power to Barack Obamaâ€™s Hyde Park neighborhood in Chicago.
Monica Almeida/The New York Times
Exelonâ€™s top executives were early and frequent supporters of Mr. Obama as he rose from the Illinois State Senate to the White House. John W. Rogers Jr., a friend of the presidentâ€™s and one of his top fund-raisers, is an Exelon board member. David Axelrod, Mr. Obamaâ€™s longtime political strategist, once worked as an Exelon consultant, and Rahm Emanuel, the Chicago mayor and Mr. Obamaâ€™s former chief of staff, helped create the company through a corporate merger in 2000 while working as an investment banker.
With energy an increasingly pivotal issue for the Obama White House, a review of Exelonâ€™s relationship with the administration shows how familiarity has helped foster access at the upper reaches of government and how, in some cases, the outcome has been favorable for Exelon.
White House records show that Exelon executives were able to secure an unusually large number of meetings with top administration officials at key moments in the consideration of environmental regulations that have been drafted in a way that hurt Exelonâ€™s competitors, but curb the high cost of compliance for Exelon and its industry allies.
In addition, Exelon, which provides power to more than 6.6 million customers in at least 16 states and the District of Columbia, was chosen as one of only six electric utilities nationwide for the maximum $200 million stimulus grant from the Energy Department. And when the Treasury Department granted loans for renewable energy projects, Exelon landed a commitment for up to $646 million allowing it, on extremely generous financial terms, to finance one of the worldâ€™s largest photovoltaic solar projects.
Exelonâ€™s seemingly easy access to top administration officials has hardly gone unnoticed among competitors.
â€śI would like to get some treatment in Washington like that,â€ť said Ken Anderson, general manager at Tri-State G&T, a Colorado-based power supplier that has been at odds with Exelon over environmental regulations. â€śBut Exelon seems to get deference that I canâ€™t get.â€ť
White House officials and top executives at Exelon, which operates the nationâ€™s largest fleet of nuclear power plants, say the relationship does not reflect favoritism, but rather a shared vision of moving the nation toward a cleaner energy future.
Paul Elsberg, an Exelon spokesman, said the companyâ€™s record with the administration was more mixed than it might initially appear.
â€śIf you look at the full track record, there are examples where the company got what it advocated for and examples where it hasnâ€™t,â€ť Mr. Elsberg said. For example, company executives noted that the administrationâ€™s decision to abandon the planned Yucca Mountain nuclear waste site left them without a permanent place to dispose spent nuclear spent fuel.
Yet one person who met with Exelon representatives as a federal official, and requested anonymity because the discussions were confidential, said that while the companyâ€™s connections did not guide specific decisions, federal officials knew to handle Exelon carefully.
â€śIt is not necessarily unethical or immoral,â€ť he said, â€śit is just a fact of life that Exelon has more relations with senior administration officials than others, which means Exelon has a direct line to fairly high places in the White House if they need to.â€ť
Even without any political connection, as a nuclear energy producer Exelon was well positioned to take advantage of the administrationâ€™s drive to reduce reliance on fossil fuels.
The administrationâ€™s tightening of clean air rules was a particular boon, since it took aim at Exelonâ€™s main competitors â€” coal-burning power plants in the Midwest and mid-Atlantic regions. In 2010, Exelon estimated it would earn an extra $400 million annually because the regulations would force dozens of coal-burning plants to close.
â€śWe were the hyena looking for the dead stuff on the road,â€ť John W. Rowe, Exelonâ€™s recently departed chief executive, told Wall Street analysts this year.
While other nuclear and natural-gas-focused energy producers also stood to benefit, Exelon stands out for its size. Last December, the Justice Department approved its $7.9 billion merger with Constellation Energy of Maryland, despite objections from Marylandâ€™s consumer advocate. Although Exelon agreed to sell three Maryland power plants, among other concessions, it still emerged as the nationâ€™s largest unregulated electricity generator, meaning that in many of the states its rates are not set by government officials but by what customers will pay.
However well-situated Exelonâ€™s business is politically, it has not been shielded from other forces. The expected bounce from the new clean air rules has largely failed to materialize because soaring natural gas production has dropped electricity prices. It has a fresh agenda of lobbying and legal issues, including trying to block construction of certain competing power plants as well as proposed nuclear safety measures flowing from the March 2011 Fukushima accident in Japan.
Still, the relationship between Mr. Obama and Exelon has been mutually beneficial.
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