A first-of-its-kind provision included in a DTE Energy regulatory case could shine a light on some of the company’s contributions to dark money nonprofits belonging to state politicians or political entities.
The provision may also illuminate a financial link between DTE Energy and its linked 501(c)(4) dark money nonprofit, Michigan Energy First, which is run by company executives and gives millions of dollars each election cycle to state politicians and political organizations.
State election law does not require dark money nonprofits to report the sources of financial contributions, so it is currently unclear how much DTE Energy gives to Michigan Energy First.
The provision developed by Michigan Attorney General Dana Nessel’s office and included in the regulatory case could change that. The “accountability and transparency is long overdue,” Nessel spokesperson Danny Wimmer said in a statement to Planet Detroit.
“Subjecting utility corporations to greater transparency on their political spending allows the people of Michigan to see how these monopolist business giants are influencing state policies on energy and other issue areas,” he said. “Michigan is now one of the first states in the nation to require political spending transparency of a utility.”
But the provision may have some loopholes. Yousef Rabhi, a former Ann Arbor state representative who served as Democratic House Floor Leader for the previous two legislative sessions, noted the rule does not apply to secretive 527 organizations. A 2016 MLive investigation found around a third of Michigan lawmakers had 527s. They do not have to report donors unless a $25,000 threshold is reached.
Moreover, it only requires DTE Energy to report its contributions over $5,000, so the provision may capture the “intensity” of the company’s giving, but it won’t capture the breadth, Rabhi said.
He added that the provision is a “step in the right direction,” but said there are more steps to take.
“It’s a bare minimum. Obviously we should do this, but it is scratching the surface of what we should be doing — banning these utilities from giving to legislators at all,” Rabhi said.
In a statement, DTE Energy spokesperson Peter Ternes explained why the company agreed to the provision.
“In recent years, various stakeholders have expressed interest in increased political giving transparency. We ultimately decided to provide them with the information they desire,” Ternes said. “The [regulatory case] was a mechanism to do that to the satisfaction of one or more intervening stakeholders.”
The provision was included in DTE’s integrated resource plan, a plan for delivering energy in the coming years. It would make the company’s political contributions available in October each year. The language reads as follows:
“Beginning October 2024, an annual public disclosure will be provided on the DTE website by October 1st for the prior year ending August 31st. The report will include contributions made by a DTE entity (parent company, regulated utilities, etc.) to any other entity that total $5,000 or more in the aggregate (including donations made to organizations that qualify as tax-exempt under Sections 501(c)(3) and 501(c)(4) of the Internal Revenue Service code).”
The provision comes as DTE’s political spending has come under intense scrutiny in recent years over what critics say is the legislature’s failure to do anything of substance in response to the company’s high rates and poor service.
Few entities spread more money around the state legislature than DTE, and the money it gives directly to candidates’ campaigns or political action committees, known as PACs, is already made public on the Michigan Secretary of State’s elections page.
But evidence suggests its largest contributions are dispersed to dark money nonprofits, or via money the company gives to Michigan Energy First. Critics say that spending through different channels profoundly affects the political process. That impacts customers’ daily lives as they contend with long outages, high rates, and climate change with little help from political leadership.
“Utilities throughout the country have a significant impact on energy policy ranging from the type of generation sources used to produce electricity (coal, nuclear, natural gas, renewables), to the reliability of the electrical grid powering homes or business, to the offerings of low-income and shutoff resources variably available to financially-struggling customers,” Wimmer said.
IRS records from 2020 show how active Michigan Energy First was in election-year giving. It recorded $5.7 million in contributions to state leaders’ political organizations, state parties, business groups and other influential organizations in Lansing.
Among those were a $30,000 donation to former House Speaker Lee Chatfield’s Peninsula Fund; a $125,000 to another Chatfield-linked fund, Protecting Michigan’s Future; a $250,000 donation to the Detroit Mayor Mike Duggan-linked Detroiters For Change nonprofit; and a $140,000 donation to the Michigan Chamber of Commerce.
“[The provision] indicates the appetite for Michiganders to understand how DTE is using its money to influence Michigan’s politics and policy making,” said Karlee Weinmann, a researcher with the Energy and Policy Institute, a utility industry analyst. “It is entirely warranted given DTE’s outsized influence in Lansing and their historic usage of … dark money giving to exert that influence.”
Playing games with Michigan Energy First
If one asks DTE Energy, it will almost certainly publicly claim it has nothing to do with Michigan Energy First. The length to which it goes to distance itself from the dark money nonprofit, how Michigan Energy First influences the political process, and how the provision may provide clarity around the nonprofit is exemplified in its 2020 $100,000 donation to the effort to repeal Michigan Gov. Gretchen Whitmer’s emergency order powers and end the state’s Covid lockdowns and restrictions.
The donation was revealed in a January Planet Detroit investigation, which found Michigan Energy First funded Unlock Michigan, the group behind the effort to repeal the powers. Though state law shields the identity of Michigan Energy First’s contributors, IRS law makes its spending available, but not until nearly a year after the calendar year in which the donation is made.
IRS records made public in late 2021 showed the nonprofit made a $100,000 donation to a dark money nonprofit that was the primary funder of the Unlock Michigan campaign in mid-2020.
DTE has repeatedly denied that it is connected to Michigan Energy First, and denied any financial involvement with Unlock Michigan. But Michigan Energy First’s three officers are DTE executives who work with an attorney, federal records show, and company executives have controlled the nonprofit since it was created in 2014.
Michigan Energy First has funded DTE allies in the state legislature, promoted the company’s interests on social media, funded community organizations whose leaders in turn support DTE in regulatory hearings, and financially backed or opposed political initiatives like Unlock Michigan.
Still, DTE spokesperson Ternes told Planet Detroit in January that the company “unequivocally” did not make the donation. “We do not speak” for the dark money group, Ternes added.
DTE also denied making a donation when asked by a Planet Detroit reporter in 2020: “DTE unequivocally is not financially supporting the Unlock Michigan/MI Citizens For Fiscal Responsibility campaign.”
The repeal campaign was ultimately successful. If DTE had given money to another 501c4 or 501c3 dark money nonprofit with the new provision in place, the financial link could have been proven.
“It’s exciting and it represents a new day in transparency about utility spending and political influence in Michigan,” Weinmann said. “This is a novel tactic and one that we look forward to seeing play out.”
The problems with dark money and utilities’ political spending are not unique to Michigan. Nessel’s office said its hope “is to see political spending transparency extended to other utilities in the state and around the country, either by legislative efforts or orders of utility regulators.”
But Rabhi stressed there is more work to do in Michigan.
“The minute we accept this as good enough, no further change will happen, and we can’t be complacent,” he said.