DTE Energy shareholders reject transparency proposal

Despite the mounting backlash against DTE Energy’s political influence operation in Michigan, executives and shareholders of the utility rejected a proposal that would have required it to make annual disclosures about its political spending. The utility’s refusal to increase transparency comes after it has escalated its dark money activities and habitually used a variety of nonprofits to mask extensive political spending to advance its own interests. DTE still faces calls to detail its spending by state policymakers.

The recent transparency resolution, explicitly opposed by DTE’s board of directors, was put forward as part of the company’s annual meeting by the SEIU Master Trust — a DTE shareholder — and supported by the Defend Black Voters Coalition. DTE leadership pushed for shareholders to vote down the measure, which would have required the utility to publish the following on an annual basis:

• Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications;
• Payments by DTE used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient;
• DTE’s membership in and payments to any tax-exempt organization that writes and endorses model legislation; and 
• A description of management’s decision-making process and the Board’s oversight for making such payments. 

The framework would have forced DTE to detail corporate dark money spending used for lobbying and funneled into LLC and 501(c)(4) organizations that help conceal such transactions. The proposal called out 501(c)(4) nonprofits linked to DTE that have pushed the utility’s political agenda, including Michigan Energy First and the Clean and Sustainable Energy Fund. It noted that DTE “critically fails to disclose its payments” to these organizations.

“Companies can give unlimited amounts to third party groups that spend millions on lobbying and often undisclosed grassroots activity,” the shareholder proposal noted, adding that this covert spending may be as much as double the amount publicly reported through required local, state, and federal disclosures.

Michigan’s other major investor-owned utility, Consumers Energy, now makes public 501(c)(4) contributions of more than $25,000 after years of receiving similar shareholder proposals.

DTE’s rejection puts focus on Michigan policymakers to protect customers

DTE shareholders ultimately sided with its Board’s recommendation, voting down the transparency proposal on May 4 by a margin of 101,536,233 to 42,863,661, according to a filing with the Securities and Exchange Commission. 

Showings of significant support for shareholder resolutions can help provoke changes from management even if they don’t attain a majority. A political spending transparency resolution targeting Consumers Energy achieved 45% and 35% in back-to-back years. Coupled with those votes, the utility received a strong signal from the Michigan Public Service Commission (PSC) when regulators approved a rate case settlement that barred a Consumers subsidiary from contributing to 501(c)(4) groups. 

In the absence of voluntary action by the company’s shareholders, reforms to increase transparency and protect customers – who pay some of the highest rates in the Midwest for some of the worst service – would likely have to come from Michigan policymakers. 

Michigan House Majority Floor Leader Abraham Aiyash has called for reforms this legislative session.

“If DTE can’t keep your lights on, they at least should allow some sunshine on all the dark money they spend to keep bad policies in place. Michiganders have made it crystal clear: Invest in grid, stop blocking solar energy efforts, stop spending dark money in Lansing,” Aiyash tweeted in April. Other lawmakers have called for a prohibition on monopoly utility campaign spending and insisted on “reforms that are long overdue.”

Speaking at a rally in support of the recent shareholder proposal, U.S. Rep. Rashida Tlaib – whose district includes some of the DTE customers most burdened by frequent outages and lagging infrastructure maintenance – said that “investor-owned utilities will always put profits over people.”

The shareholder proposal is similar to a framework Michigan Attorney General Dana Nessel has advocated for in rate cases. Nessel, who has been vocal in her efforts to protect utility customers, is pushing the PSC to require utilities to provide the following:

• Expenses for the purpose of influencing regulation or legislation directly or indirectly through affiliates;
• Expenses for the purpose of influencing public opinion about policy issues or about the company’s reputation directly or indirectly through affiliates;
• Expenses relating to all proceedings before the Commission, with specificity about how and how much the company spent on the previous rate case and how much it forecasted for the current general rate case;
• The 501(c)(3) and 501(c)(4) contributions to each non-profit organization, including those organizations receiving contributions from the utility’s affiliated 501(c)(3) charitable foundations; and
• Expenses for any litigation that utilities file seeking to overturn rules or statutes.

“Utilities are government-created monopolies regulated by the state,” Nessel said when she announced her proposed reforms. “Accordingly, customers of these monopolies should have the right to know whether and how much their utility is spending to influence legislation or other public policy that impacts the utility and consumers.”

The PSC has not yet ruled on the Attorney General’s proposal, and state legislators have been slow to address this issue and others that are top of mind for environmental groups.

At the legislature, one bill so far has surfaced that relates to utilities’ political spending, but it would add little in the way of new transparency or changes to the status quo. The legislation, SB 296 – introduced by Republican Senators Runestad, Ruth Johnson, and Joe Bellino – would require utilities to itemize the payments made to candidates, political party committees, independent committees, political groups organized under section 527 of the Internal Revenue Code (such as the Republican Attorneys General Association), as well as lobbying expenditures. All of that information is already publicly available through the Federal Election Commission, IRS, and Michigan Department of State websites.

While there is a provision in SB 296 that would require utilities to disclose spending to 501(c)(4) nonprofits, which is not currently made public by DTE, the bill appears to provide a built-in loophole. The requirement as written would apply to utility subsidiaries (like DTE Gas or DTE Electric) but not to corporate holding companies (like DTE Energy). 

This loophole could allow DTE to avoid disclosures by channeling political spending through their corporate holding company or unregulated subsidiaries, such as DTE Vantage. 

Michigan policymakers can look to Colorado and Connecticut

Policymakers in other states are increasingly recognizing, and trying to address, problems with utilities’ political spending. 

In Colorado, Governor Jared Polis recently signed landmark legislation that, among other policies, prohibits investor-owned utilities from using customer money to fund trade associations and other political influence activities, including legislative lobbying, charitable giving, and advertising. 

At the same time, Connecticut legislators are continuing a years-long overhaul of utility regulation in that state. Draft legislation prohibits utilities from charging customers for lobbying, advertising, and trade association dues – all critical elements of their political influence operations. The bill has passed multiple committees with bipartisan support.