Southern: The New Power in Power

With Enron gone, it has serious clout in Washington

In recent years, Southern Co.'s strategy in Washington hasn't been terribly different from that of other successful corporations: lavish millions on politicians and hire a battery of A-list lobbyists to make sure its voice was heard in the corridors of power. Trouble was, as hard as it tried, the Atlanta-based utility giant kept running into fierce resistance from a colossus called Enron Corp., whose views on energy deregulation and other issues were diametrically opposed to Southern's agenda.

Now, with Enron having collapsed in scandal, Southern is emerging as the new power in power. And the company that provides electricity to 4 million customers in the Southeast intends to use that clout to win concessions as Congress completes action on an energy package and clean-air legislation. "Southern is the 800-pound gorilla" of energy companies, an industry lobbyist says. "They're more powerful than Enron ever was."

Indeed, Southern is throwing more money around Washington than Enron did in its heyday. The utility's seven political action committees have spent more than $1 million since 1999, according to the Center for Responsive Politics. That's more than the PACs of ChevronTexaco (CVX ), BP (BP ), and Enron.

Southern's contributions open doors, but its real juice comes from a pack of high-powered lobbyists. Besides an in-house staff of four lobbyists, Southern has heavyweights like former Republican National Committee Chairman Haley Barbour and C. Boyden Gray, George H.W. Bush's White House counsel, on its payroll. RNC Chairman Marc Racicot, a close friend of the President, lobbied for the company in the past.

Southern's lobbying activities don't stop at the federal level. In its four states, Southern, its affiliates, and its employees donated $116,430 to candidates in the latest election, according to the National Institute on Money in State Politics. Southern subsidiaries were the top energy contributors to pols in Mississippi and Georgia, while its Gulf Power ranked third in Florida.

What is Southern getting for its money? At the state level, it has staved off deregulation. And on White House policies from energy to air pollution, the utility has found a sympathetic ear. Case in point: Twelve days after a Mar. 1, 2001, letter from Barbour to Vice-President Dick Cheney, President Bush reversed his position and said he did not favor tougher standards for carbon dioxide emissions.

Administration officials insist they were not influenced by Barbour. But environmentalists see a pattern. "We have a paper trail indicting Southern," charges John Walke, an attorney at the Natural Resources Defense Council. "It distorts public policy, and it manipulates the political process." Responds Dwight H. Evans, Southern's executive vice-president for regulatory and legislative affairs: "The [greens] have an agenda and will distort the facts to [accomplish] whatever they need to do."

The influence of Southern, which reported $2.2 billion in first-quarter revenues, will be tested again in coming weeks as the energy debate heats up. Legislation nearing completion on Capitol Hill includes several measures pushed by Southern, such as research and development funding for clean-coal technologies. In addition, the House version provides $3.3 billion in tax credits over 10 years for clean-coal investment and production--another item on Southern's wish list.

A tougher test could come in late May, when the Senate Committee on Environment & Public Works is expected to take up a proposal to require power plants to reduce "multi-pollutant" emissions. Southern, which opposes government regulation of CO2 emissions, may not be able to prevent committee approval of the bill by Chairman Jim Jeffords (I-Vt.). But the utility is girding for a protracted fight on Capitol Hill.

While Southern and the Administration are united against Jeffords, they are on opposite sides of an air-pollution lawsuit brought by the Clinton Environmental Protection Agency. The issue is "new source review," which requires companies to get a permit from the EPA and meet strict emissions standards when modifying an existing plant. But Southern hopes an energy-friendly President will reinterpret the rule.

Whether Southern ultimately wins its "new source" battle or not, it already seems to have triumphed in its war over electricity deregulation. The issue was its biggest bone of contention with dereg champion Enron. After all, why would Southern want competition in the Southeast, where it effectively has a monopoly? In the wake of new evidence that Enron and Reliant traders manipulated California markets, Southern hopes to bury the Enron-led deregulation push forever.

While Southern favors electricity regulation, it fights every other kind of red tape. "If it's regulation, they want less of it," says Eric Schaeffer, former head of the EPA's Office of Regulatory Enforcement, who resigned to protest the Administration's pro-industry leanings. "If it's pollution control, they want less of it. And if it's enforcement, they certainly want less of it."

Environmentalists have targeted the company with a massive "Clean Up Southern" campaign. But with Enron out of the way, Southern will have more time and resources to devote a counterattack. Look for those silver-tongued lobbyists to lead the charge.

By Laura Cohn in Washington

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