Bacon's Rebellion

Democracy Thrives in Sunlight

Dominion Does the Right Thing, Eats Cost of Some Charitable Giving

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by

James A. Bacon
in ,

money

I’m a few days late getting to this, but it’s still worthy of note… Dominion Virginia Power has told the State Corporation Commission that it will not try to recover $2 million in charitable deductions made in 2013 and 2014. The Associated Press had reported that the power company had sought to include in its rate base the cost of tens of thousands of dollars donated to causes for what could be construed as political motivatations.

“Some have cynically suggested that certain charitable organizations to which we have contributed are motivated not by the civic good but instead by political considerations. We do not agree with those suggestions or that our charitable giving practices are anything other than well-intentioned,” said Paul D. Koonce, Dominion vice president, in filed testimony, reports the AP in an update.

The State Corporation Commission had declared in 2011 that it was legal to seek recompense for the contributions, but SCC staff had raised the issue anew in filed testimony. The AP story specifically mentioned $40,000 donated to a tort reform group and a $10,000 gift to a college solicited by a lawmaker who is the school’s paid fundraiser.

Bacon’s bottom line: The amount of money was miniscule — less than a penny per month per customer — but the optics were terrible. Dominion is arguably the most politically powerful corporation in Virginia, fielding a small army of lobbyists, communicators and community relations professionals while also donating major sums to political candidates. Fairly or unfairly, the company is widely said to “own” the SCC and/or legislators. For a minimal impact to shareholders, Dominion has eliminated a practice that feeds negative perceptions about the company.

— JAB

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  1. LarrytheG Avatar
    LarrytheG

    I note in another discussion that self-identified libertarian types were OUTRAGED that WalMart was donating to charities because they felt it was being added to the price of the things they bought.

    some thought the practice should be outlawed all together… no charitable giving by for-profit companies!

  2. Rowinguy Avatar
    Rowinguy

    I guess some do say that Dominion “owns” the SCC. Those who do should look at the Commission’s final order in Dominion’s Rider U case.

    http://www.richmond.com/business/ap/article_db027179-19c8-5109-8f79-55a2dc4aa700.html

    1. TomH Avatar
      TomH

      It is unclear from this ruling whether the SCC feels there is no business case for undergrounding or whether Dominion didn’t make a proper argument (or maybe didn’t want to?).

      In many circumstances, if you do an NPV comparison of the two alternatives undergrounding can pay off. It depends on how much you spend to do it. New innovative and less expensive methods are coming forward which have little ongoing expense. If used in areas that have high tree trimming expenses and frequent storm repair costs, or expensive outage consequences; undergrouding can be a net benefit.

      1. Rowinguy Avatar
        Rowinguy

        In either event, Dominion wanted to spend billions of customer money and the Commission was not convinced to permit them to do it.

        Next time, I suppose Dominion will try a better case.

  3. TomH Avatar
    TomH

    I think it is unfair to prohibit a corporation from providing assistance to communities that they serve. We should preserve our freedom of choice. However, it might be appropriate not to allow it as a tax deduction.

    An interesting proposal is to allow only the basic expenses of doing business to be deducted from revenues and the responsibility for the income tax on the profits would fall to the shareholders. This would eliminate the double taxation of dividends. Corporations don’t pay many taxes anyway (corporations now have the lowest percentage contribution to our federal income tax in history) and what they do pay just shows up in the customers’ price. This would eliminate many of the nonsense special deductions that companies pay legislators to get and would repatriate the billions in hidden profit tucked away in other countries. If we had not created a separate corporate tax 100 years ago, we might have avoided many of the abuses of the last century. Corporations would argue that this would penalize U.S. based companies or cause them to incorporate in other countries. Could be some truth to that.

    However, a simpler, fairer tax system has appeal. Business decisions would be made solely on the merits. Not on some convoluted after-tax evaluation. If an industry needed assistance to get started, a benefit with a set lifespan could be provided. Initial tax advantages that get built in as permanent tax reductions distort market signals.

    Those special interests that have been most successful in using their regulatory and legislative influence to gain tax advantages, erect barriers to entry by competitors and other special favors are often those who yell the loudest about maintaining “free markets” in their particular playing field which is anything but “level”.

  4. Acbar Avatar
    Acbar

    The larger question is, are corporations “people” and do they, therefore, have the same rights as people? That includes, of course, the right of the corporation to donate to political campaigns and charities, and the right of the corporation to express its views in interviews, advertising and billing inserts, including, in opposition to legislation and regulations.

    I feel strongly that it’s a vicious slippery slope to restrict those rights; but there is a legitimate contrary view: that a corporation, because it is a creature of the State, should not be allowed to get involved in social policy or politics or attempting to influence public opinion. That’s what the Citizens United case was all about.

    But after the corporation has spoken and the charitable donations have been made, the regulator has to decide whether the costs involved are expenses of the regulated utility business (and reflected as such in determining the next round of utility rates) or an expense of the unregulated side of the corporation? That can be a tough call too. Should the utility (in this case Dominion Power) be forbidden to support charities and community events at ratepayer expense? Cynics will say these activities are no more than advertising and image building. I think they are community-building also, even primarily, and most utilities support their communities because that’s their future, too; they “live” there. I hope Dominion continues to support local charities and I’m quite willing to pay a reasonable amount for it through my electric rates.

    1. James A. Bacon Avatar
      James A. Bacon

      Dominion should be allowed to contribute to whomever it pleases. It should be able to tap the same tax deductions as any other corporation. It should be able to collect recompense from rate payers for true community-building activities. I draw the line at dunning the rate payers for contributions that arguably have a political purpose.

      1. Rowinguy Avatar
        Rowinguy

        Very well said, Jim.

  5. LarrytheG Avatar
    LarrytheG

    one could argue that a corporation does not create money and when they “donate” – you’re really the one donating..

    no?

    what I prefer is at the checkout – they say “do you want to donate a dollar to the Children Miracle Network … or at Wegmans where they say “do you want to round up your bill by giving the difference to: ”

    When business gives to charity – it’s basically PR. It’s not like they give the money anonymously as a benevolent corporate citizen. They print up posters… put it in Ads.. etc.. PR.

    on Citizens United. No other OECD country allow this kind of money in politics.

    There is a law called the Hatch Act for govt employees but the premise is the same – there are potential conflicts of interests .

    I was sort of okay with the idea that political donations were “ok” as long as the public knew what they where and as soon as the money was given but that’s become a joke. Money is “laundered” out the wazoo… and dark money has become the norm.

    “free speech” should not live next door to “corruption” and no wonder the apologists for McDonnell were saying he wasn’t doing anything out of the ordinary – all politicians do it, no problem.

  6. TooManyTaxes Avatar
    TooManyTaxes

    I can respect how some criticize Citizens United. But why would it be wrong to prohibit Dominion from making campaign contributions or spending money advocating for this candidate or issue, while allowing the Washington Post Corp. to spend money advocating for this candidate or issue? They pay their editorial board and incur costs distributing their opinions. Why can labor unions become involved in politics? Why do we allow the Sierra Club to have a political arm?

    Either restrict campaign contributions & advocacy to individuals without bundling or allow everyone the same freedom.

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