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Yesterday — 21 November 2024Main stream

Climate-Fueled Insurance Hikes Are Fueling Delinquent Mortgages, New Study Finds

21 November 2024 at 11:00

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

When Miguel Zablah bought his five-bedroom home in Miami’s leafy Shenandoah neighborhood in June of 2020, he said he paid $7,000 a year for homeowner’s insurance. 

The house, built in 1923, sits on high ground and has survived a century of famously volatile South Florida weather. But in just four short years, Zablah said his homeowner’s insurance premium has more than doubled to $15,000 a year. Quotes for next year’s premiums are looking even worse. 

“Some insurance companies are now quoting me at $20,000, $25,000 on my house, which is ridiculous,” said Zablah, who works in private equity. The premium increases are so steep that he’s considering just paying off his mortgage—and foregoing the insurance that his lender requires him to carry. “I’m very grateful that I’m in a good position,” he added. 

Zablah’s premium increases are a symptom of a broader insurance crisis plaguing real estate markets across America. Experts say it’s fueled, in large part, by the disastrous effects of human-caused climate change. 

Flooding is more frequent. Higher temperatures stoke stronger hurricanes. Wildfires burn more acres. And Americans have spent generations moving to sunny places that are often the most in harm’s way, including Florida, Texas, and California. 

In Louisiana, some residents along coastal Highway 56 have decided to leave, in part, because they can’t get coverage. 

So, the cost of insuring homes against natural disasters is spiking along with atmospheric temperatures and carbon dioxide levels.

Now, new research shows that higher insurance premiums like the one Zablah is paying significantly increase the probability of people falling behind on their mortgages—or motivate them to pay the debt off early. The outcomes spell trouble for banks, and for homeowners. 

How significant is the increase in mortgage trouble? A $500 spike in annual insurance premiums was linked to a 20 percent higher mortgage delinquency rate.

That figure was extracted from findings in a recent study, which will be expanded and then undergo peer review, according to Shan Ge, an assistant professor of finance at New York University and one of the paper’s authors.

“What we found, which is the first in the literature, is that as insurance premiums go up, we have seen an increase in delinquency of mortgages,” Ge said. The research adds to a growing body of scientific literature proving that the climate crisis is also a housing crisis.

It’s a crisis with a brutal, but important side effect: Higher premiums may convince people in vulnerable areas like Miami to move out of harm’s way. 

“The market is clearly adapting, and there will be winners and losers…but ultimately there should be more winners to the extent that it sends signals and people get out of the way,” said Jesse Keenan, a professor of sustainable real estate and urban planning at Tulane University who was not involved in the study. 

Graffiti in Panama City Beach, Florida, in the wake of 2018’s Hurricane Michael. Mario Alejandro Ariza/Floodlight)

Zablah also heads the board of the Brickell Roads condominium association in Miami, where he owns an investment property. The effects of climate change are felt there too.

Brickell Roads residents had been paying $350 a month in condo fees in 2022. But then Weston Insurance, the carrier of the association’s windstorm policy, went bust. 

It was the fifth Florida insurance carrier to fold that year in the wake of Hurricane Ian, which slammed into the Southeast United States, causing an estimated $112 billion in damage. It was the most expensive storm ever in Florida and third most expensive in US history. 

As the association scrambled to find a replacement policy, it confronted a stark reality: Monthly condo fees would more than triple under their new insurance policy. On October 1, 2023, it raised the condo fee at Brickell Roads to $1,000 a month. (The board has since found another insurance carrier and hopes to lower the fee to $700 a month, according to Zablah.) 

“In some Florida counties, homeowners are paying over 5 percent of their income just on their policies.” 

Climate change has blown a hole through insurance markets across the United States. In Louisiana, some residents along coastal Highway 56 have decided to leave, in part, because they can’t find companies willing to insure their homes. 

In California, that state’s Department of Insurance has barred carriers from not renewing policies in certain fire-prone zip codes, essentially forcing the companies to insure properties there. And in Florida, a volatile mix of fraud, litigation, floods, and hurricanes has left homeowners like those in Brickell Roads scrambling for coverage. 

One major reason for the spike in insurance prices is a rise in the cost of the insurance coverage that insurance companies purchase for themselves, known as reinsurance. Globally, reinsurers raised prices for property insurers by 37 percent in 2023. (Prices stabilized somewhat in 2024.)

Insurers have passed those costs on to customers, said industry analyst Cathy Seifert during a Bloomberg TV appearance on November 4. “The insurance industry will leverage climate change into pricing strength,” she said. 

Analysts and scholars who study the nexus between climate change and housing had long theorized that higher insurance rates would negatively affect property markets. 

An August 2024 report by the Congressional Budget Office noted that in 2023, 30 percent of losses from natural disasters went uninsured. Those losses further constrict an already tight supply of housing. Researchers have also found that higher insurance rates affect the availability of affordable housing. It turns out, housing markets might be more sensitive to premium spikes than many thought.

As seen from the air, a black pickup truck with an orange stripe slogs through a flooded street amid palm trees and lush foliage in Hallandale Beach Florida after heavy rainfall last june
A storm surge from 2018’s Hurricane Michael caused extensive damage in Mexico Beach, Florida. Mario Alejandro Ariza/Floodlight

Using a dataset that links insurance policies with mortgages for 6.7 million borrowers, Ge and two other researchers established that spikes in insurance premiums led a significant number of borrowers to either pay off their mortgages early or fall behind. Obviously, many homeowners can’t afford to accelerate their mortgage payoff.

The researchers found that the effect of premium increases on mortgage delinquency is twice as large for borrowers with a high loan-to-value ratio, meaning they owe a lot of money on their homes compared to the home’s value.

“This is how many people across the country are beginning to directly experience how climate change is changing our world and the cost it’s going to have,” said Moira Birss, a research fellow at the Climate and Community Institute. “In some Florida counties, homeowners are paying over 5 percent of their income just on their (insurance) policies.” 

Conversely, the NYU study found that people who took out jumbo mortgages—large loans for expensive houses that regular loans won’t cover—were three times less likely to end up falling behind on payments. Because more than two-thirds of mortgages are backed by the federal government, it’s taxpayers who could be left holding the bag from rising climate-caused delinquencies.

“I think it’s the tip of the iceberg.” said Wayne Pathman, a Miami-based land use attorney who has spent years working on resilience issues in the region. “I think it is going to get a lot worse.”

Pathman says he is seeing similar premium increases in the commercial property insurance market—and is also witnessing owners of office buildings consider choices similar to that of Zablah, the homeowner. 

Pathman recounted how one of his clients, a hotel operator, handled a looming increase in his insurance premiums. He paid off the mortgage on the building and decided to forego the $1-million-a-year premiums for windstorms. 

So next time a hurricane blows in, he’ll be on his own.

Climate-Fueled Insurance Hikes Are Fueling Delinquent Mortgages, New Study Finds

21 November 2024 at 11:00

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

When Miguel Zablah bought his five-bedroom home in Miami’s leafy Shenandoah neighborhood in June of 2020, he said he paid $7,000 a year for homeowner’s insurance. 

The house, built in 1923, sits on high ground and has survived a century of famously volatile South Florida weather. But in just four short years, Zablah said his homeowner’s insurance premium has more than doubled to $15,000 a year. Quotes for next year’s premiums are looking even worse. 

“Some insurance companies are now quoting me at $20,000, $25,000 on my house, which is ridiculous,” said Zablah, who works in private equity. The premium increases are so steep that he’s considering just paying off his mortgage—and foregoing the insurance that his lender requires him to carry. “I’m very grateful that I’m in a good position,” he added. 

Zablah’s premium increases are a symptom of a broader insurance crisis plaguing real estate markets across America. Experts say it’s fueled, in large part, by the disastrous effects of human-caused climate change. 

Flooding is more frequent. Higher temperatures stoke stronger hurricanes. Wildfires burn more acres. And Americans have spent generations moving to sunny places that are often the most in harm’s way, including Florida, Texas, and California. 

In Louisiana, some residents along coastal Highway 56 have decided to leave, in part, because they can’t get coverage. 

So, the cost of insuring homes against natural disasters is spiking along with atmospheric temperatures and carbon dioxide levels.

Now, new research shows that higher insurance premiums like the one Zablah is paying significantly increase the probability of people falling behind on their mortgages—or motivate them to pay the debt off early. The outcomes spell trouble for banks, and for homeowners. 

How significant is the increase in mortgage trouble? A $500 spike in annual insurance premiums was linked to a 20 percent higher mortgage delinquency rate.

That figure was extracted from findings in a recent study, which will be expanded and then undergo peer review, according to Shan Ge, an assistant professor of finance at New York University and one of the paper’s authors.

“What we found, which is the first in the literature, is that as insurance premiums go up, we have seen an increase in delinquency of mortgages,” Ge said. The research adds to a growing body of scientific literature proving that the climate crisis is also a housing crisis.

It’s a crisis with a brutal, but important side effect: Higher premiums may convince people in vulnerable areas like Miami to move out of harm’s way. 

“The market is clearly adapting, and there will be winners and losers…but ultimately there should be more winners to the extent that it sends signals and people get out of the way,” said Jesse Keenan, a professor of sustainable real estate and urban planning at Tulane University who was not involved in the study. 

Graffiti in Panama City Beach, Florida, in the wake of 2018’s Hurricane Michael. Mario Alejandro Ariza/Floodlight)

Zablah also heads the board of the Brickell Roads condominium association in Miami, where he owns an investment property. The effects of climate change are felt there too.

Brickell Roads residents had been paying $350 a month in condo fees in 2022. But then Weston Insurance, the carrier of the association’s windstorm policy, went bust. 

It was the fifth Florida insurance carrier to fold that year in the wake of Hurricane Ian, which slammed into the Southeast United States, causing an estimated $112 billion in damage. It was the most expensive storm ever in Florida and third most expensive in US history. 

As the association scrambled to find a replacement policy, it confronted a stark reality: Monthly condo fees would more than triple under their new insurance policy. On October 1, 2023, it raised the condo fee at Brickell Roads to $1,000 a month. (The board has since found another insurance carrier and hopes to lower the fee to $700 a month, according to Zablah.) 

“In some Florida counties, homeowners are paying over 5 percent of their income just on their policies.” 

Climate change has blown a hole through insurance markets across the United States. In Louisiana, some residents along coastal Highway 56 have decided to leave, in part, because they can’t find companies willing to insure their homes. 

In California, that state’s Department of Insurance has barred carriers from not renewing policies in certain fire-prone zip codes, essentially forcing the companies to insure properties there. And in Florida, a volatile mix of fraud, litigation, floods, and hurricanes has left homeowners like those in Brickell Roads scrambling for coverage. 

One major reason for the spike in insurance prices is a rise in the cost of the insurance coverage that insurance companies purchase for themselves, known as reinsurance. Globally, reinsurers raised prices for property insurers by 37 percent in 2023. (Prices stabilized somewhat in 2024.)

Insurers have passed those costs on to customers, said industry analyst Cathy Seifert during a Bloomberg TV appearance on November 4. “The insurance industry will leverage climate change into pricing strength,” she said. 

Analysts and scholars who study the nexus between climate change and housing had long theorized that higher insurance rates would negatively affect property markets. 

An August 2024 report by the Congressional Budget Office noted that in 2023, 30 percent of losses from natural disasters went uninsured. Those losses further constrict an already tight supply of housing. Researchers have also found that higher insurance rates affect the availability of affordable housing. It turns out, housing markets might be more sensitive to premium spikes than many thought.

As seen from the air, a black pickup truck with an orange stripe slogs through a flooded street amid palm trees and lush foliage in Hallandale Beach Florida after heavy rainfall last june
A storm surge from 2018’s Hurricane Michael caused extensive damage in Mexico Beach, Florida. Mario Alejandro Ariza/Floodlight

Using a dataset that links insurance policies with mortgages for 6.7 million borrowers, Ge and two other researchers established that spikes in insurance premiums led a significant number of borrowers to either pay off their mortgages early or fall behind. Obviously, many homeowners can’t afford to accelerate their mortgage payoff.

The researchers found that the effect of premium increases on mortgage delinquency is twice as large for borrowers with a high loan-to-value ratio, meaning they owe a lot of money on their homes compared to the home’s value.

“This is how many people across the country are beginning to directly experience how climate change is changing our world and the cost it’s going to have,” said Moira Birss, a research fellow at the Climate and Community Institute. “In some Florida counties, homeowners are paying over 5 percent of their income just on their (insurance) policies.” 

Conversely, the NYU study found that people who took out jumbo mortgages—large loans for expensive houses that regular loans won’t cover—were three times less likely to end up falling behind on payments. Because more than two-thirds of mortgages are backed by the federal government, it’s taxpayers who could be left holding the bag from rising climate-caused delinquencies.

“I think it’s the tip of the iceberg.” said Wayne Pathman, a Miami-based land use attorney who has spent years working on resilience issues in the region. “I think it is going to get a lot worse.”

Pathman says he is seeing similar premium increases in the commercial property insurance market—and is also witnessing owners of office buildings consider choices similar to that of Zablah, the homeowner. 

Pathman recounted how one of his clients, a hotel operator, handled a looming increase in his insurance premiums. He paid off the mortgage on the building and decided to forego the $1-million-a-year premiums for windstorms. 

So next time a hurricane blows in, he’ll be on his own.

Before yesterdayMain stream

Private Calls and Campaign Cash: Louisiana Regulators’ Ties to the Utilities They Oversee

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

This past April, days before a Louisiana Public Service Commission (PSC) meeting at a remote lakefront resort, the state’s largest power company dropped a bombshell. Entergy asked the five commissioners to vote—four months ahead of a schedule—on an ambitious resilience plan slated to cost nearly $2 billion.

A Louisiana consumer watchdog group and the state’s refineries and chemical plants formally objected, saying the process was “unnecessarily fast-tracked” and that Entergy had provided “insufficient information” to evaluate the plan, which included replacing and strengthening utility poles and power lines and protecting substations from flooding.

Despite these objections, Entergy’s plan was added to the agenda. “This is [a] wholly undemocratic process,” James Hiatt, an environmental activist, protested to the panel. “Why does it need to be rushed through today?” 

Shortly before the meeting, Entergy’s big industrial customers, including Chevron and ExxonMobil, dropped their opposition to the plan after the PSC shifted millions of dollars of the cost onto Entergy’s residential and commercial ratepayers. 

Commissioners Davante Lewis and Foster Campbell, blindsided by the change, pushed their colleagues for a postponement. They were overruled, and the plan was approved.

The sale of Entergy Louisiana’s gas distribution system to Bernhard Capital Partners, a private equity group, was approved in August by the Louisiana Public Service Commission, whose members have received at least $200,000 in campaign contributions from Bernhard since 2017.
Entergy Louisiana

This last-minute decision to saddle ratepayers with a greater share of the utility’s costs, exemplifies the imbalance of power in Louisiana and what’s at stake in the upcoming election for an open PSC seat. Whoever wins will replace Republican Craig Greene, a critical swing vote on the commission.  

“Most residents in Louisiana have no idea who’s making the decisions about how much their utility bills cost,” said Logan Atkinson Burke, executive director of the Louisiana-based consumer group Alliance for Affordable Energy. “You can’t possibly say residents have the same voice the fossil industry and utilities do.”

“I don’t know of another public service commission that has the level of authority and the breadth and depth of jurisdiction without…any other controls.”

One possible reason for the power imbalance: Over the past decade, nearly 43 percent, or about $3.5 million, of all $250-plus campaign donations to Louisiana’s commissioners came from utilities, energy-related businesses, and their attorneys and lobbyists, according to a Floodlight analysis of elected utility commissioners in multiple states. “It’s probably as close to bribery as you could possibly get and call it legal,” said Simon Mahan, executive director of the Southern Renewable Energy Association. 

The PSC, in turn, has resisted measures that could curb utility profits, such as requiring them to encourage energy efficiency or add renewable energy to the power mix—actions that could not only save ratepayers money, but also help reduce greenhouse gas emissions in one of the states most affected by climate change. 

Beyond the campaign donations, Louisiana law lets its commissioners engage in unreported private chats with representatives of the utilities they regulate—”ex parte” communications that are banned or subject to strict reporting requirements in many other states. This can work both ways, said commissioner Lewis, who described such conversations as “very frequent and very deliberate.” He can reach out to the utilities to say he disagrees with their stance on certain issues, for example. But absent any restrictions, “I do think it is a little bit harmful to the people of Louisiana.”

According to David Cruthirds, a regulatory attorney who spent 11 years observing and writing about utility commissions, including Louisiana’s, giving companies such unfettered access is “basically as if a criminal defendant can talk with a jury and judge behind the scenes without anyone knowing about it.”

“I don’t know of another public service commission that has the level of authority and the breadth and depth of jurisdiction without any—I don’t want to use the word ‘oversight’—but any other controls,” Burke said. 

Louisiana is one of only 10 states with elected utility commissioners. According to data Floodlight analyzed in its months-long investigation, its commissioners receive more campaign cash from utility and oil and gas interests than their counterparts in any other of those states except Alabama. 

Since 2014, the investigation found, power companies and fossil fuel interests have given a total of $13.5 million to elected utility regulators in nine of those 10 states—about 35 percent of all direct campaign contributions of $250 or more. (The remaining state, Nebraska, was excluded from the analysis because it has no private electric utilities.) That total does not count the millions of dollars funneled through political nonprofits that are not required to report their donors. (Hence the expression “dark money.”)

Over the past decade, Floodlight found, Entergy Louisiana, its executives, and their family members, gave about $350,000 to PSC commissioners. For Cleco, the state’s second largest electric utility, the total was $206,000. (Neither company responded to requests for comment.)

Commissioners who responded to Floodlight’s inquiries insisted that such contributions don’t influence their decisions. “Hell no, I do what I want,” said Campbell, who has been on Louisiana’s PSC for 21 years. Over the last decade, he’s received more than one-third of his financial support from utilities and fossil fuel sources.

Commissioner Mike Francis, who has received half of his contributions from the same sources, says utilities support him because he’s making sound, business-centered decisions.

Louisiana’s utility commission is not overseen or directed by the legislature or the governor and is therefore uniquely situated to cut greenhouse gas emissions in the oil-friendly state by reducing its reliance on fossil fuels to produce electricity. But it rarely does.

In fact, based on figures from the US Energy Information Administration, Louisiana is tied for last among the 50 states for renewable energy use, with just 3 percent of its electricity coming from renewable resources. 

In recent years, however, some commissioners have begun advocating for renewables and greater sustainability—namely Lewis, fellow Democrat Campbell, and swing Republican member Greene, whose seat is up for grabs. 

In January, these three commissioners outvoted their colleagues to pass an energy efficiency program operated by an independent third party. Of the five commissioners, they are the ones who got the smallest share of their financial support from fossil fuel companies and utilities—Lewis has received just 11 percent, while Campbell and Greene each received 34 percent.

Opposing them on the energy efficiency issue were Mike Francis and Eric Skrmetta, who each got at least half of their support from those vested interests. Skrmetta even filibustered for nearly two hours while members of the audience at the meeting where the issue was decided chanted, “Vote! Vote! Vote!” 

The candidates running to replace Greene include Jean-Paul Coussan, who has received 27 percent of his funding from utility and fossil fuel interests as of October 31, and Julie Quinn, with 26 percent. A third candidate, Nick Laborde, says he’s refusing all such donations and has received none to date.

Private Calls and Campaign Cash: Louisiana Regulators’ Ties to the Utilities They Oversee

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

This past April, days before a Louisiana Public Service Commission (PSC) meeting at a remote lakefront resort, the state’s largest power company dropped a bombshell. Entergy asked the five commissioners to vote—four months ahead of a schedule—on an ambitious resilience plan slated to cost nearly $2 billion.

A Louisiana consumer watchdog group and the state’s refineries and chemical plants formally objected, saying the process was “unnecessarily fast-tracked” and that Entergy had provided “insufficient information” to evaluate the plan, which included replacing and strengthening utility poles and power lines and protecting substations from flooding.

Despite these objections, Entergy’s plan was added to the agenda. “This is [a] wholly undemocratic process,” James Hiatt, an environmental activist, protested to the panel. “Why does it need to be rushed through today?” 

Shortly before the meeting, Entergy’s big industrial customers, including Chevron and ExxonMobil, dropped their opposition to the plan after the PSC shifted millions of dollars of the cost onto Entergy’s residential and commercial ratepayers. 

Commissioners Davante Lewis and Foster Campbell, blindsided by the change, pushed their colleagues for a postponement. They were overruled, and the plan was approved.

The sale of Entergy Louisiana’s gas distribution system to Bernhard Capital Partners, a private equity group, was approved in August by the Louisiana Public Service Commission, whose members have received at least $200,000 in campaign contributions from Bernhard since 2017.
Entergy Louisiana

This last-minute decision to saddle ratepayers with a greater share of the utility’s costs, exemplifies the imbalance of power in Louisiana and what’s at stake in the upcoming election for an open PSC seat. Whoever wins will replace Republican Craig Greene, a critical swing vote on the commission.  

“Most residents in Louisiana have no idea who’s making the decisions about how much their utility bills cost,” said Logan Atkinson Burke, executive director of the Louisiana-based consumer group Alliance for Affordable Energy. “You can’t possibly say residents have the same voice the fossil industry and utilities do.”

“I don’t know of another public service commission that has the level of authority and the breadth and depth of jurisdiction without…any other controls.”

One possible reason for the power imbalance: Over the past decade, nearly 43 percent, or about $3.5 million, of all $250-plus campaign donations to Louisiana’s commissioners came from utilities, energy-related businesses, and their attorneys and lobbyists, according to a new Floodlight analysis of elected utility commissioners in multiple states. “It’s probably as close to bribery as you could possibly get and call it legal,” said Simon Mahan, executive director of the Southern Renewable Energy Association. 

The PSC, in turn, has resisted measures that could curb utility profits, such as requiring them to encourage energy efficiency or add renewable energy to the power mix—actions that could not only save ratepayers money, but also help reduce greenhouse gas emissions in one of the states most affected by climate change. 

Beyond the campaign donations, Louisiana law lets its commissioners engage in unreported private chats with representatives of the utilities they regulate—”ex parte” communications that are banned or subject to strict reporting requirements in many other states. This can work both ways, said commissioner Lewis, who described such conversations as “very frequent and very deliberate.” He can reach out to the utilities to say he disagrees with their stance on certain issues, for example. But absent any restrictions, “I do think it is a little bit harmful to the people of Louisiana.”

According to David Cruthirds, a regulatory attorney who spent 11 years observing and writing about utility commissions, including Louisiana’s, giving companies such unfettered access is “basically as if a criminal defendant can talk with a jury and judge behind the scenes without anyone knowing about it.”

“I don’t know of another public service commission that has the level of authority and the breadth and depth of jurisdiction without any—I don’t want to use the word ‘oversight’—but any other controls,” Burke said. 

Louisiana is one of only 10 states with elected utility commissioners. According to data Floodlight analyzed in its months-long investigation, its commissioners receive more campaign cash from utility and oil and gas interests than their counterparts in any other of those states except Alabama. 

Since 2014, the investigation found, power companies and fossil fuel interests have given a total of $13.5 million to elected utility regulators in nine of those 10 states—about 35 percent of all direct campaign contributions of $250 or more. (The remaining state, Nebraska, was excluded from the analysis because it has no private electric utilities.) That total does not count the millions of dollars funneled through political nonprofits that are not required to report their donors—hence the expression “dark money.”

Over the past decade, Floodlight found, Entergy Louisiana, its executives, and their family members, gave about $350,000 to PSC commissioners. For Cleco, the state’s second largest electric utility, the total was $206,000. (Neither company responded to requests for comment.)

Commissioners who responded to Floodlight’s inquiries insisted that such contributions don’t influence their decisions. “Hell no, I do what I want,” said Campbell, who has been on Louisiana’s PSC for 21 years. Over the last decade, he’s received more than one-third of his financial support from utilities and fossil fuel sources.

Commissioner Mike Francis, who has received half of his contributions from the same sources, says utilities support him because he’s making sound, business-centered decisions.

Louisiana’s utility commission is not overseen or directed by the legislature or the governor and is therefore uniquely situated to cut greenhouse gas emissions in the oil-friendly state by reducing its reliance on fossil fuels to produce electricity. But it rarely does.

In fact, based on figures from the US Energy Information Administration, Louisiana is tied for last among the 50 states for renewable energy use, with just 3 percent of its electricity coming from renewable resources. 

In recent years, however, some commissioners have begun advocating for renewables and greater sustainability—namely Lewis, fellow Democrat Campbell, and swing Republican member Greene, whose seat is up for grabs. 

In January, these three commissioners outvoted their colleagues to pass an energy efficiency program operated by an independent third party. Of the five commissioners, they are the ones who got the smallest share of their financial support from fossil fuel companies and utilities—Lewis has received just 11 percent, while Campbell and Greene each received 34 percent.

Opposing them on the energy efficiency issue were Mike Francis and Eric Skrmetta, who each got at least half of their support from those vested interests. Skrmetta even filibustered for nearly two hours while members of the audience at the meeting where the issue was decided chanted, “Vote! Vote! Vote!” 

The candidates running to replace Greene include Jean-Paul Coussan, who has received 27 percent of his funding from utility and fossil fuel interests as of October 31, and Julie Quinn, with 26 percent. A third candidate, Nick Laborde, says he’s refusing all such donations and has received none to date.

Utility Regulators Take Millions From Industries They Oversee. What Could Go Wrong?

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

It was 2:30 in the morning on November 6, 2014, when flames engulfed the New Orleans home of political consultant Mario Zervigon. Someone had lit his cars on fire, and the flames spread to his house. Zervigon and his family barely made it out of the three-unit building alive. Multiple cats didn’t. 

Law enforcement deemed it arson and investigated whether the fire was related to Zerivigon’s campaign work. (They would ultimately close the case without naming a suspect.) The night before, Zervigon had celebrated the primary election victory of one of his clients for a seat on Louisiana’s Public Service Commission (PSC), a down-ballot position with vast power over the state’s oil, gas, and utility companies.

The candidate, Forest Bradley-Wright, was running as a Republican on a reform platform. He had rejected donations from companies the PSC oversees—a rarity in Louisiana. But the firebombing rattled his campaign. Zervigon took a leave of absence, Bradley-Wright’s fundraising flagged, and another candidate, who had received generous support from the companies in question, eked out a 1.6 percent win in the general election. 

Bradley-Wright now says he believes the firebombing was an act of “political terrorism” meant “to intimidate or at least cripple my campaign.” He argues the incident is worth revisiting because it shows just how high the stakes can get in the election of regulators charged with making, in some cases, billion-dollar decisions and shaping a state’s energy policies. 

“Public utility commissions—especially in the context of climate change—are really important institutions that most people aren’t even aware exist,” said Jared Heern, a Brown University researcher who studies the relationship between the commissions and the industries they regulate. 

But fossil fuel companies and electric utilities, and their lawyers and consultants, are well aware of their importance. 

A new Floodlight analysis of campaign finance data in nine of the 10 states that elect their commissioners found that more than a third of their campaign contributions of $250 and up came from fossil fuel and electric utility interests—more than $13.5 million in all. The analysis covered contributions to the 54 commissioners elected in the 10 years ending on December 31, 2023.

On Tuesday, voters will choose among 33 candidates vying for utility commission seats in eight of those states. 

The states examined were Alabama, Arizona, Georgia, Louisiana, Mississippi, Montana, North Dakota, Oklahoma, and South Dakota. Nebraska, which elects its commissioners but has no private electric utilities, was excluded. (In the remaining 40 states, utility regulators are appointed by governors and/or legislative leaders.)

Topping the influence list is Alabama, where commissioners get almost 55 percent of their financial support from fossil fuel and utility interests. Louisiana is second, with nearly 43 percent. Overall, those sources contribute more than twice as much as the renewables industry does to elect commissioners they believe will be friendly to their interests. The renewables donations accounted for only $5.1 million, or 13 percent, of the roughly $39 million analyzed.

These findings suggest that the electoral influence of fossil fuel and utility contributors may be interfering with some states’ ability to decarbonize, with consequences for consumers and the environment alike.

Indeed, a number of the states are located in the sun belt, making them ideal for solar energy development, yet their commissioners’ decisions have ensured that only a tiny fraction of their power mix comes from the sun. In some cases, commissioners appear openly hostile to the adoption of renewables, far more of which will be needed to limit the catastrophic effects of climate change.

This failure to adapt is a bad deal for homeowners and businesses. Residential energy bills in Alabama, for example, exceed the national average by $32 a month, and bills in Georgia, Louisiana, and Mississippi have increased faster than the national average over the past five years, according to data from Findenergy.com. This year in Arizona, power bills spiked amid the state’s hottest summer on record. And in Oklahoma, commissioners approved so many fracking applications that the state briefly led the country in earthquakes. 

“It's kind of ludicrous on its face,” said journalist David Roberts, who hosts an energy policy podcast called  Volts, “that commercial entities directly regulated by these people are allowed to give these people money.”

In fact, laws in Alabama, Georgia, and Mississippi prohibit regulated utilities from making direct campaign contributions to commissioners. But in all of those states, Floodlight’s analysis found, contractors, attorneys, or political action committees closely aligned with the utilities keep the money flowing. “(When) the people regulating the utility are essentially propped up by the utility itself, it's problematic,” said Ari Peskoe, director of the Electricity Law initiative at Harvard University. “I think everybody can recognize that as a conflict of interest.” 

The coal-fired James H. Miller Jr. Electrical Generating Plant in Jefferson County, Alabama, a state tied for last place in its adoption of renewable energy sources.Lee Hedgepeth/Inside Climate News

It also turns out that the commissioners who get a large share of their campaign cash from sources linked to fossil fuel firms and utilities tend to stay in office longer than their colleagues. 

Nationwide, utility commissioners serve 5.9 years on average. In states where they are elected, these officials became more entrenched, serving 7.4 years—and a whopping 9.2 years in states where fossil fuel and utility interests account for at least 30 percent of their campaign contributions, according to Floodlight’s analysis of data provided by Heern. 

Consider Alabama PSC member Jeremy Oden. During his 12 years in office, Oden, a Republican, received about $1.3 million, roughly 80 percent of his campaign funds, from sources with links to fossil fuel companies and utilities. 

While Alabama commissioners cannot take money directly from the companies they oversee, our analysis and leaked records revealed that Oden’s top donors were political action committees operated by accountants with long-standing ties to consultants for Alabama Power, the state's largest utility. 

Oden did not respond to requests for comment. Tim Whitt, a principal of the campaign committee to elect Oden, provided a written statement. “All of his campaign contributions have been received and reported in accordance with Alabama law,” it stated, adding: “Commissioner Oden has not received any campaign contributions from regulated utilities.”

The cash flowing into Oden’s campaign coffer has come in handy for tight races, like the first round of the Republican primary in May 2022. If he won the primary, Oden, already in office for a decade at the time, would be certain to win the general election in deep red Alabama.

The three Republicans running against him were calling for more renewable energy and cheaper bills. Alabama, a state with strong solar potential, generates less power from rooftop solar than even low-potential states such as Maine and Michigan. It also has very little utility-scale solar, and saddles utility ratepayers with some of the nation’s highest electric bills. 

So what did Oden do? He took to the airwaves, appearing in TV ads dressed in hunting gear and wielding a shotgun. Calling himself “a Christian conservative pro-Trump Republican,” who “would always fight and defend our God-given Second Amendment rights,” the bald, bespectacled commissioner took aim, but not at his opponents: “With your help, I’ll shoot down Biden’s Green New Deal and keep the left from jacking up our energy prices,” Oden narrated over footage of him downing clay pigeons. 

Alabama PSC commissioner Jeremy Oden takes some rhetorical potshots at the Green New Deal in a campaign ad.

Bolstered by his advertising budget, he won 34 percent of the vote in the four-candidate field before going on to clinch the primary runoff, and later, the general election. 

As a commissioner, Oden has taken aim at clean energy, imposing steep fees on families who install home solar panels, making it a bad investment choice even though those households were using far less utility-generated power than before. And he voted for a series of rate increases that have led to Alabama having the Deep South’s second highest energy prices

Oden and his fellow commissioners have also blocked utility-scale solar and battery storage projects, even some requested by Alabama Power. Such moves—raising the cost of electricity while preventing customers from generating their own—benefit the shareholders and top officials of the utilities Oden is charged with regulating. 

“The influence of money in [utility commission] elections is very high because in a vacuum of information, whoever has the most money gets their message out the best,” said Joshua Basseches, an assistant professor at Tulane University who studies energy and climate policy. “In theory, the elected commissioners would be less susceptible to regulatory capture, because they would have to face the voters,” but "in practice, what happens is that these are very low-visibility elections.” 

Voters, in other words, have little to go on.

Residents packed the house at a November 2019 Public Service Commission meeting to discuss Alabama Power Co.'s proposed fees for rooftop solar households.Solomon Crenshaw Jr./BirminghamWatch

Utility commissions, writ broadly, are charged with overseeing the complex activities and fielding the demands of massive energy conglomerates that the state has granted regional monopoly powers. Commissioners vet new projects, monitor utility financials, and evaluate rate hike requests. The companies, meanwhile, are ensured a guaranteed return on investment, which averages about 10 percent nationally. 

Though each commission is different, their basic mission is the same: to ensure a safe and reliable grid and affordable energy for consumers. But sometimes the relationship between regulator and regulated gets a little too cozy, a phenomenon economists call “regulatory capture.”

“Investments in political candidates—and particularly for economic regulators like a utility commissioner—there's no better market return,” said Tyson Slocum, director of the energy program at Public Citizen, a consumer-advocacy nonprofit . “The amount of benefit that a utility can get, that a fossil fuel interest can get, from a friendly regulator, is better than anything that the stock market can provide.”

Regulatory capture can be costly to consumers. Since 2017, electricity bills in Georgia have increased by about $45 a month, more than double the national average, according to data from FindEnergy.com. Electricity rates, which constitute just a portion of the bill, have kept pace with the national average. Most of the increase is due to surcharges to pay for the $35 billion buildout of a nuclear generating station originally forecast to cost $14 billion.

Commissioner Bob Anthony deemed one PSC decision “the largest fleecing of the Oklahoma ratepayer in the history of the state.” Asked why his colleagues voted for it, he said: “Follow the money."

Back in 2012, when the Nuclear Regulatory Commission gave Georgia Power permission to build two new reactors at Plant Vogtle, the state’s utility commissioners were receiving 70 percent of their campaign support from companies or people that stood to benefit financially, or not, from their decisions, the Atlanta Journal-Constitution reported.

Over the next decade, the five commissioners approved $3.2 billion in cost overruns. ”This nuclear expansion does not make sense. It’s way over budget, way behind schedule,” Jennette Gayer, director of the nonprofit Environment Georgia, told Floodlight. 

Although Georgia law bars utilities from donating in PSC elections, nearly one-third of the campaign contributions to its commissioners since 2014 have come from fossil fuel and utility interests. Among the donors are Georgia Power executives, regulatory attorneys with business before the commission, and construction companies that specialize in utility work.

Thanks to a series of legal battles, Georgia hasn’t held elections for its PSC since 2020, and sitting commissioners have not had to disclose their campaign contributions since 2021. “The commissioners follow all campaign finance laws,” said PSC spokesman Tom Krause. “This includes disclosure of all donors and donated amounts as required by state and federal law.”

A rooftop solar installation in Hiram, Georgia. Despite an abundance of sun potential, Georgia is among the Deep South states that have been very slow to embrace solar power.Deidra Hodges/US DOE via Wikimedia Commons

Critics have also pointed to Oklahoma as a place where commissioners’ close relationships to the companies they oversee might be harming residents. Members of the state Corporation Commission (utility commissions go by various names) have taken in more than $1 million—nearly 35 percent of donations of $250 or more over the last decade—from sources linked to fossil fuel firms and utilities.

In 2022, the commission rapidly approved a plan for ratepayers to shoulder historic increases on their gas bills. The decision followed 2021’s Winter Storm Uri, which depleted the state’s gas reserves, forcing utilities to purchase gas on the spot market at exorbitant prices. The $3 average cost for 1,000 cubic feet of gas skyrocketed to $1,200 for a brief time, saddling the utilities with $3 billion in extra costs.

“What’s the result of all this fossil fuel industry money? ... Very little renewable energy, and in some cases, like Alabama and Mississippi, overt hostility.”

The companies  wanted to pass that loss along to their ratepayers. After the Legislature passed a bill allowing them to issue bonds to finance the debt, the corporation commissioners gave the utilities exactly what they wanted. “We paid more for natural gas in three days than we do in a year,” said Nick Singer, a leader with VOICE Oklahoma, a civic engagement coalition. “And they just created a debt instrument to put it on the backs of ratepayers for the next 25 years. And they did it in a couple months.”

This spring, Oklahoma’s attorney general filed a pair of lawsuits against gas pipeline firms, alleging they helped bid up prices to historic highs during the storm. Commissioner Bob Anthony was the only one of the state’s three commissioners to vote against securitization. In a July op-ed in the Oklahoman, he called the panel’s vote “the largest fleecing of the Oklahoma ratepayer in the history of the state.” 

Asked why his fellow commissioners voted the other way, Anthony, who is serving his final term, told Floodlight: “Follow the money, that’s the heart of it.”

“Correlation does not necessarily determine causation,” Trey Davis, a spokesman for the commission responded in an email, “and, while you might want to argue a majority decision is analogous to some form of quid-pro-quo, you do not appear to have provided any substance in support of what is tantamount to a spurious and seemingly subliminal allegation.”

Almost all of the states that elect their commissioners are led by Republicans—only Arizona has a Democratic governor. The Deep South states in particular stand out for their dearth of renewable energy.

According to the US Energy Information Administration, Alabama, Louisiana, and Mississippi all derive less than 1 percent of their electricity from solar despite ample solar potential in those states. (Utility-scale solar is the cheapest form of energy currently available.) That’s less than one-quarter of the national average.

In Mississippi, where PSC members got 12 percent of their campaign cash from fossil fuel interests, commissioners are openly dismissive of calls to improve the state’s 37th-place solar energy ranking. During an August “solar summit,” two commissioners abruptly cut off public discussion and ended the session early after pro-solar representatives stood up to speak. 

“What’s the result of all this fossil fuel industry money in commission elections?” said Daniel Tait, research and communications director for the Energy and Policy Institute, a utility watchdog. “Very little renewable energy, and in some cases, like Alabama and Mississippi, overt hostility.”

Several utilities in Arizona and Alabama have been caught making large, unreported, and difficult-to-trace dark money contributions to support commissioner candidates.

One state recently switched how it picks energy regulators. New Mexico, a Democratically controlled state with a powerful oil and gas industry, transitioned from electing commissioners to appointing them in 2023. The state law governing the transition also required commissioners to have degrees in fields related to energy. 

Its fresh slate of appointed commissioners has since approved a rate increase for the primary utility, the Public Service Company of New Mexico—but the amount was only about a quarter of what the utility requested. They also ordered PNM to return some $115 million in excess profits to its ratepayers. (The utility has appealed the latter decision to the state Supreme Court.)

One energy activist now says she preferred the elected commissioners, because campaign finance data made utility influence easier to trace—and counteract. “I think that the elected commission was more democratic, even though PNM spent hundreds of thousands of dollars trying to elect the commissioners they wanted,” said Mariel Nanasi, executive director of New Energy Economy, a renewable energy nonprofit. “That backfired for them, and their preferred candidates—at least in more recent times—lost because [their campaign spending] was exposed.” 

The patchwork nature of campaign finance record-keeping and disclosure laws in the United States also can make it difficult to track industry money flowing into state utility commission elections. 

In Mississippi and South Dakota, for example, Floodlight journalists had to manually enter into a database thousands of campaign contributions from records that were handwritten or kept in unsearchable formats. 

The money also can also come through supposedly independent groups—like political committees and 501(c)(4) (dark money) groups that don’t have to reveal their donors—making it harder to trace. These groups are allowed to support (or oppose) particular candidates but are not legally allowed to coordinate with any candidate’s campaign.

Arizona is the only one of the nine states analyzed that makes tracking independent campaign spending easy. For example, the dominant utility, Arizona Public Service, donated nearly $4.2 million in 2016 to the Arizona Coalition for Reliable Electricity, a political action committee that then spent nearly that exact amount to support the company’s preferred commissioners. (Arizona also provides commission candidates with public financing, which was not included in our analysis.)

Over the past decade, several utilities in Arizona and Alabama have been caught making large, unreported, and difficult-to-trace dark money contributions to support PSC candidates.

Clearly, utilities and fossil fuel interests are not donating to lawmakers and energy regulators out of the goodness of their hearts. But campaign donations, to be fair, don’t always predict how a legislator or regulator will act. Oklahoma commissioner Anthony received 65 percent of his donations from such sources, and he has often been a lone dissenting voice on the commission against policies that he says put consumers on the hook for the utilities’ mistakes. 

Bob Burns, an Arizona Corporation Commission member, got 41 percent of his donations from industry sources. Yet in 2016, he used his position to crusade for campaign finance transparency from the holding company that owns Arizona Public Service, which stood accused of using millions of dollars of dark money to support its preferred commissioner candidates. (Under pressure from the commission, the company eventually acknowledged its tactics.)

At least one energy regulator told Floodlight he struggled over whether to take donations from the companies he oversees. “I went through the process of trying to figure out from whom do I accept a donation?” said Gary Hanson, who sits on the South Dakota Public Utilities Commission. His conclusion: “I’m either going to accept donations from everyone or from no one—you either accept from everyone or you don’t accept from anyone.”

He took the money. 

Floodlight reporter Kristi E. Swartz contributed to this story.

“They Stole an Election”: Former Florida Senator Found Guilty in “Ghost Candidates” Scandal

1 October 2024 at 00:20

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

Former Florida state Sen. Frank Artiles was convicted by a Miami-Dade Circuit Court jury Monday evening, the latest fallout from the state’s 2020 “ghost candidates” scandal.

Artiles was convicted on three felony counts related to $44,000 in payments he made to Alex Rodriguez, a no-party candidate whose role was to siphon votes from Sen. Jose Javier Rodriguez, the Democratic incumbent. The six-member jury deliberated for seven hours before reaching its verdict. Artiles was acquitted on a fourth count of aiding and abetting a false voter registration. Artiles sat stone-faced as the guilty verdicts were read.

“They won. They were successful. They beat JJR,” public corruption prosecutor Tim VanderGiesen said in his opening argument. “They beat the incumbent named Rodriguez.” 

“They stole an election,” he said. 

Artiles’ defense attorney Frank Quintero had reminded jurors that ghost candidates are legal “so long as Florida election law is not violated.”

But that’s precisely what the jury found. 

Florida Power & Light’s then-CEO Eric Silagy had instructed underlings to make Florida state Sen. Jose Rodriguez’s life “a living hell.”

The term “ghost candidate” is used to describe a candidate who has no chance of winning, but runs to harm an actual contender’s chances. Ghost candidate Rodriguez was part of an opaquely funded 501(c)(4)—or “dark money”—effort enabled by consultants working for Florida Power & Light, a subsidiary of the NextEra utility conglomerate.

Florida Power & Light CEO Eric Silagy, who was never charged with wrongdoing, had ordered his underlings to “make [Sen. Rodriguez’s] life a living hell.” Silagy retired abruptly in January 2023 in the wake of reporting by Floodlight and its media partners about FPL’s involvement in the ghost candidate scandal.

Artiles was charged with conspiracy, making campaign contributions above the $1,000 limit, and “false swearing” for instructing Alex Rodriguez—who actually lived outside District 37—on how to fill out paperwork to get on the ballot. 

Artiles, who faced up to five years in prison per count, sat quietly throughout the two-week trial. He was flanked by his attorneys, Quintero and Frank Quiñon. Behind him in the Miami courtroom was a revolving cast of friends and family.

The charges stem from efforts to achieve a Republican supermajority in the Florida Senate by running three ghost candidates to take votes away from Democratic candidates in key 2020 races. The spoiler candidates were backed, in part, by a series of nonprofits controlled by Jeff Pitts, then-CEO of Matrix LLC, a consulting company that was working for Florida Power & Light, according to reporting by Floodlight and other news outlets

The nonprofits in question were 501(c)(4)s, which are not required to disclose their donors’ identities, and the prosecution stopped short of tracing the money back to its original source. On September 27, Florida federal judge Aileen Cannon dismissed a shareholder lawsuit accusing FPL’s parent company, NextEra Energy, of issuing misleading statements about its political activities.

From the utility’s perspective, as noted in our earlier, in-depth story on the scandal, expanding GOP dominance—by whatever means—would help fulfill the utility’s legislative priorities:

Those priorities included escaping liability for damages related to power outages in the wake of Hurricane Irma; ousting J.R. Kelly, the state’s long-serving (unsympathetic) consumer utility watchdog; and winning approval from the Senate-confirmed Public Service Commission for Florida’s largest-ever hike in electricity rates. 

The defeat of Sen. Rodriguez had the added benefit of kneecapping one of the state’s most prominent backers of rooftop solar, which reduces carbon emissions and lowers utility bills—and against which FPL had waged a decade-long counterinsurgency campaign.

He was defeated by 32 votes by Ileana Garcia, founder of Latinas for Trump.

Prosecutors said consultants implicated in the scandal had withheld records that had been subpoenaed. Key evidence in the form of hundreds of text messages between Artiles and Rodriguez also went missing, they said.

Much of the trial revolved around the credibility of the state’s star witness, ghost candidate Alex Rodriguez, who admitted under cross examination that he had a difficult relationship with the truth. To buttress his credibility, prosecutors laid out the broader effort to influence the 2020 election. 

Their first witness was a reticent Pat Bainter, a north Florida peanut farmer and powerful operative for the state Republican Senatorial Campaign Committee. 

In a pretrial deposition, Bainter, whose company, Data Targeting, did work for GOP candidates, had acknowledged he paid Artiles $15,000 a month for six months for on-the-ground research in the District 37 race, including running a spoiler candidate. Bainter also acknowledged he sent a $100,000 no-strings-attached payment to a 501(c)(4) nonprofit controlled by Artiles. 

Testimony and evidence presented at trial revealed that Bainter held meetings with Artiles and Garcia campaign consultants who had a business relationship with Pitts, then-CEO of Matrix.

“There is no other explanation for why the defendant is giving tens of thousands of dollars to Alex Rodriguez,” the prosecutor said.

Garcia’s campaign manager testified that Bainter held the purse strings for that campaign. Bainter, too, testified that his company worked for Garcia’s campaign.

Rodriguez took the stand late on the fourth day of the trial. Prosecutor VanderGiesen showed him totals from the 2020 race, in which he got 6,000 votes.

“Did you come about getting those votes honestly?”

“No,” Rodriguez responded. 

Rodriguez, who had pleaded guilty to election-related charges and served six months of home detention and three years of probation, also testified that Artiles offered him $50,000 to run as a spoiler: $25,000 before the election and $25,000 after.

But he was afraid Artiles would never come through on his promise to pay, so he “fabricated” a series of business deals involving construction equipment, diesel engines and COVID masks to extract money from Artiles. He also asked Artiles to help cover his rent and his daughter’s private school tuition, Rodriguez testified. 

At one point, he admitted, he invented a story about a Range Rover he was going to buy at auction for Artiles, asking the former state senator for a $10,900 payment.

His reason for all the scams? “I was concerned I wasn’t going to get the $50,000.”

The defense grilled Rodriguez, working to establish reasonable doubt about the nature of his transactions with Artiles. They portrayed the former senator as the victim in a series of fraudulent business deals and requests for financial help from Rodriguez. “The evidence is going to show that Rodriguez is a con artist, a professional con artist, a pathological liar,” Quintero told the jurors.

On the stand, Rodriguez didn’t defend himself, replying to Quintero’s increasingly forceful questions in a quiet monotone. 

The key question posed by the defense was: Could the state prove—incontrovertibly—that the payments at the heart of the case were illegal campaign contributions? 

“There is no other explanation,” VanderGiesen posited, “for why the defendant is giving tens of thousands of dollars to Alex Rodriguez.”

When approached by a reporter from Floodlight, Rodriguez declined to speak on the record until the end of the trial. He took the reporter’s phone number and said he would call. As he walked down the escalator, he shot the reporter a wink. 

The reporter also spoke to Artiles shortly before the verdict was handed down. Artiles called the trial “a colossal waste of time.”

“The press won’t report what’s really happening,” he said. 

The reporter replied that he’d be happy to write the whole story—if he could ever find out precisely what it was. 

“They Stole an Election”: Former Florida Senator Found Guilty in “Ghost Candidates” Scandal

1 October 2024 at 00:20

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

Former Florida state Sen. Frank Artiles was convicted by a Miami-Dade Circuit Court jury Monday evening, the latest fallout from the state’s 2020 “ghost candidates” scandal.

Artiles was convicted on three felony counts related to $44,000 in payments he made to Alex Rodriguez, a no-party candidate whose role was to siphon votes from Sen. Jose Javier Rodriguez, the Democratic incumbent. The six-member jury deliberated for seven hours before reaching its verdict. Artiles was acquitted on a fourth count of aiding and abetting a false voter registration. Artiles sat stone-faced as the guilty verdicts were read.

“They won. They were successful. They beat JJR,” public corruption prosecutor Tim VanderGiesen said in his opening argument. “They beat the incumbent named Rodriguez.” 

“They stole an election,” he said. 

Artiles’ defense attorney Frank Quintero had reminded jurors that ghost candidates are legal “so long as Florida election law is not violated.”

But that’s precisely what the jury found. 

Florida Power & Light’s then-CEO Eric Silagy had instructed underlings to make Florida state Sen. Jose Rodriguez’s life “a living hell.”

The term “ghost candidate” is used to describe a candidate who has no chance of winning, but runs to harm an actual contender’s chances. Ghost candidate Rodriguez was part of an opaquely funded 501(c)(4)—or “dark money”—effort enabled by consultants working for Florida Power & Light, a subsidiary of the NextEra utility conglomerate.

Florida Power & Light CEO Eric Silagy, who was never charged with wrongdoing, had ordered his underlings to “make [Sen. Rodriguez’s] life a living hell.” Silagy retired abruptly in January 2023 in the wake of reporting by Floodlight and its media partners about FPL’s involvement in the ghost candidate scandal.

Artiles was charged with conspiracy, making campaign contributions above the $1,000 limit, and “false swearing” for instructing Alex Rodriguez—who actually lived outside District 37—on how to fill out paperwork to get on the ballot. 

Artiles, who faced up to five years in prison per count, sat quietly throughout the two-week trial. He was flanked by his attorneys, Quintero and Frank Quiñon. Behind him in the Miami courtroom was a revolving cast of friends and family.

The charges stem from efforts to achieve a Republican supermajority in the Florida Senate by running three ghost candidates to take votes away from Democratic candidates in key 2020 races. The spoiler candidates were backed, in part, by a series of nonprofits controlled by Jeff Pitts, then-CEO of Matrix LLC, a consulting company that was working for Florida Power & Light, according to reporting by Floodlight and other news outlets

The nonprofits in question were 501(c)(4)s, which are not required to disclose their donors’ identities, and the prosecution stopped short of tracing the money back to its original source. On September 27, Florida federal judge Aileen Cannon dismissed a shareholder lawsuit accusing FPL’s parent company, NextEra Energy, of issuing misleading statements about its political activities.

From the utility’s perspective, as noted in our earlier, in-depth story on the scandal, expanding GOP dominance—by whatever means—would help fulfill the utility’s legislative priorities:

Those priorities included escaping liability for damages related to power outages in the wake of Hurricane Irma; ousting J.R. Kelly, the state’s long-serving (unsympathetic) consumer utility watchdog; and winning approval from the Senate-confirmed Public Service Commission for Florida’s largest-ever hike in electricity rates. 

The defeat of Sen. Rodriguez had the added benefit of kneecapping one of the state’s most prominent backers of rooftop solar, which reduces carbon emissions and lowers utility bills—and against which FPL had waged a decade-long counterinsurgency campaign.

He was defeated by 32 votes by Ileana Garcia, founder of Latinas for Trump.

Prosecutors said consultants implicated in the scandal had withheld records that had been subpoenaed. Key evidence in the form of hundreds of text messages between Artiles and Rodriguez also went missing, they said.

Much of the trial revolved around the credibility of the state’s star witness, ghost candidate Alex Rodriguez, who admitted under cross examination that he had a difficult relationship with the truth. To buttress his credibility, prosecutors laid out the broader effort to influence the 2020 election. 

Their first witness was a reticent Pat Bainter, a north Florida peanut farmer and powerful operative for the state Republican Senatorial Campaign Committee. 

In a pretrial deposition, Bainter, whose company, Data Targeting, did work for GOP candidates, had acknowledged he paid Artiles $15,000 a month for six months for on-the-ground research in the District 37 race, including running a spoiler candidate. Bainter also acknowledged he sent a $100,000 no-strings-attached payment to a 501(c)(4) nonprofit controlled by Artiles. 

Testimony and evidence presented at trial revealed that Bainter held meetings with Artiles and Garcia campaign consultants who had a business relationship with Pitts, then-CEO of Matrix.

“There is no other explanation for why the defendant is giving tens of thousands of dollars to Alex Rodriguez,” the prosecutor said.

Garcia’s campaign manager testified that Bainter held the purse strings for that campaign. Bainter, too, testified that his company worked for Garcia’s campaign.

Rodriguez took the stand late on the fourth day of the trial. Prosecutor VanderGiesen showed him totals from the 2020 race, in which he got 6,000 votes.

“Did you come about getting those votes honestly?”

“No,” Rodriguez responded. 

Rodriguez, who had pleaded guilty to election-related charges and served six months of home detention and three years of probation, also testified that Artiles offered him $50,000 to run as a spoiler: $25,000 before the election and $25,000 after.

But he was afraid Artiles would never come through on his promise to pay, so he “fabricated” a series of business deals involving construction equipment, diesel engines and COVID masks to extract money from Artiles. He also asked Artiles to help cover his rent and his daughter’s private school tuition, Rodriguez testified. 

At one point, he admitted, he invented a story about a Range Rover he was going to buy at auction for Artiles, asking the former state senator for a $10,900 payment.

His reason for all the scams? “I was concerned I wasn’t going to get the $50,000.”

The defense grilled Rodriguez, working to establish reasonable doubt about the nature of his transactions with Artiles. They portrayed the former senator as the victim in a series of fraudulent business deals and requests for financial help from Rodriguez. “The evidence is going to show that Rodriguez is a con artist, a professional con artist, a pathological liar,” Quintero told the jurors.

On the stand, Rodriguez didn’t defend himself, replying to Quintero’s increasingly forceful questions in a quiet monotone. 

The key question posed by the defense was: Could the state prove—incontrovertibly—that the payments at the heart of the case were illegal campaign contributions? 

“There is no other explanation,” VanderGiesen posited, “for why the defendant is giving tens of thousands of dollars to Alex Rodriguez.”

When approached by a reporter from Floodlight, Rodriguez declined to speak on the record until the end of the trial. He took the reporter’s phone number and said he would call. As he walked down the escalator, he shot the reporter a wink. 

The reporter also spoke to Artiles shortly before the verdict was handed down. Artiles called the trial “a colossal waste of time.”

“The press won’t report what’s really happening,” he said. 

The reporter replied that he’d be happy to write the whole story—if he could ever find out precisely what it was. 

Florida “Ghost Candidates” Scandal Puts the Entire Utility Sector on Trial

18 September 2024 at 10:00

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

Liam Fitzpatrick’s was packed on a Tuesday in November, and all eyes in the suburban Orlando, Florida, pub were glued to the TVs behind the bar. Fitzpatrick’s usually had sports on, but this was Election Eve 2020, and Republican state Senate candidate Jason Brodeur watched nervously as the results trickled in. This was his election party. Brodeur’s campaign had spent millions of dollars running him for an open seat against the Democratic nominee, a labor attorney, and the race was neck and neck.

But his backers had a secret weapon. Just before the filing deadline, a substitute teacher named Jestine Iannotti had joined the race as an unaffiliated third-party candidate. A political unknown, she didn’t even campaign. The central Florida district was then carpeted with misleading mailers that appealed to liberal values and voters’ distaste for partisan politics—one included a stock photo that seemed to imply that Iannotti, who is white, is a Black woman. If she siphoned off votes from his Democratic rival, Brodeur stood a better chance.

Iannotti was a “ghost candidate,” one with no hope of winning who runs—or is run—specifically as a spoiler. Ghost candidates are legal in Florida—sort of. Any eligible person can run for public office, but the covert financing of ghost campaigns sometimes runs afoul of even that state’s famously lax election laws. State prosecutors would eventually conclude that Iannotti and another ghost candidate who ran in 2020—along with their political consultants—had broken quite a few. (Brodeur claimed ignorance of the scheme, and has faced no legal action as a result, though a local tax collector on trial for unrelated charges would later testify that Brodeur was well aware of it.)

Also at Fitzpatrick’s that night was then-47-year-old Frank Artiles, a burly, foul-mouthed ex-Marine and former Republican state senator. Artiles, who is Cuban American, had resigned his Senate post in disgrace in 2017 after using racial slurs in front of two Black colleagues during a drunken rant. He, too, was fixated on Brodeur’s returns, as well as the results of an even tighter state Senate race in south Miami-Dade.

Man wearing a mask wearing a white shirt surrounded by TV cameras.
Frank Artiles leaves the Turner Guilford Knight Correctional Center in Miami on March 18, 2021, after posting bail in a case related to Florida’s 2020 District 37 state Senate campaign.Matias J. Ochner/Miami Herald/Floodlight

The latter contest was a slugfest between one of Florida’s highest-profile Democratic lawmakers, José Javier Rodriguez, and Republican Ileana García, founder of Latinas for Trump. It, too, hinged on a ghost candidate: Alex Rodriguez, a down-on-his-luck salesman of used heavy equipment, whose shared surname with the incumbent was no coincidence. Like Iannotti, Rodriguez hadn’t campaigned. He, too, was boosted by a flood of misleading mailers. 

As the final tallies came in, the mood at Fitzpatrick’s turned electric. Brodeur ended up winning his seat by about 7,600 votes. (Iannotti drew nearly 6,000.) In south Miami-Dade, Garcia, the Republican, edged out incumbent José Rodriguez by fewer than 40 votes. Artiles was jubilant. “That was me!” a partygoer recalls him yelling. “That’s all me!”

At a criminal trial this week in Miami, the prosecution may ask the jury to interpret Artiles’ outburst as an admission of guilt. Four months after the election party, the Miami-Dade state attorney charged him and ghost candidate Rodriquez with multiple campaign finance–related felonies. Among other charges, Artiles stands accused of conspiracy, making excessive campaign contributions, and “false swearing” in connection with voting or elections. If found guilty on all counts, he faces up to five years in prison.

In Central Florida, prosecutors issued a multi-count indictment against Iannotti and the two operatives (Eric Foglesong and Ben Paris, chair of the Seminole County Republican Party) who’d arranged for her to run. (A ghost candidate Artiles had recruited for a third state Senate race—a spa owner whose wife regularly waxed Artiles’ back—was not charged.) In 2022, a jury found Paris guilty of interfering in an election by means of an illegal campaign donation—the state recommended 60 days in jail; the judge gave him a year of probation, community service, and a fine. Foglesong, charged with felony and misdemeanor election crimes, avoided possible jail time by pleading no contest to misdemeanor charges, and Iannotti pleaded no contest last month to a pair of first-degree misdemeanors. Artiles maintains his innocence.

In a December 2023 deposition, political consultant Patrick Bainter told Florida prosecutors that he hired former state Sen. Frank Artiles to run “independent” candidates to help solidify the Senate’s Republican majority.Floodlight

And all of the above might have been just another colorful tale of shady politics in the Sunshine State were it not for a spat between political consultants.

Indeed, after the leaders of Matrix LLC, a high-powered political consulting firm whose CEO helped finance the ghost campaigns, started feuding, the story took on a new life, offering something rarer and more consequential: a glimpse, oddly enough, into the political meddling of one of America’s largest power companies.

The source of the leak was never clear, but as the consultants squabbled, thousands of pages of Matrix’s internal documents made it into the hands of Florida news outlets. The revelations therein, and reporting on discovery materials generated by the various prosecutions, would culminate in the abrupt January 2023 retirement of Florida Power & Light CEO Eric Silagy, triggering a single-day, $14 billion drop in the company’s market value.

FPL is a subsidiary of NextEra Energy, one of the nation’s largest utility conglomerates in terms of homes and businesses served. And although its parent is a major producer of renewable energy, FPL is among Florida’s biggest greenhouse-gas emitters. The leaked documents, in any case, showed that FPL was enmeshed in a covert campaign of media manipulation, surveillance, and what one federal securities lawsuit calls electoral “dirty tricks,” all in the name of maximizing profits.

Investigations by Floodlight and other Florida news outlets would reveal that the ghost candidates were bankrolled with some $730,000 in dark money, $100,000 of which was channeled through a prominent Republican operative into a 501(c)(4) nonprofit that Artiles controlled. (Artiles’ attorney, Frank Quintero, disputes that any of that money ever made it to ghost candidate Rodriguez: “The prosecutor can say whatever the fuck he wants, but the reality is different than what he wants it to be.”) The remaining $630,000 made its way through a daisy chain of opaque nonprofits partially overseen by the CEO of Matrix, which was then working for FPL.

In this undated email obtained by Floodlight via public records request, Artiles offers advice to political consultant Patrick Bainter related to running a ghost candidate in the 2020 election.Floodlight

From the utility’s perspective, expanding the state Senate’s Republican majority—by whatever means—would help fulfill its legislative priorities. Those priorities included escaping liability for damages related to power outages in the wake of Hurricane Irma; ousting J.R. Kelly, the state’s long-serving (unsympathetic) consumer utility watchdog; and winning approval from the Senate-confirmed Public Service Commission for Florida’s largest-ever hike in electricity rates. The defeat of Sen. Rodriguez had the added benefit of kneecapping one of the state’s most prominent backers of rooftop solar, which reduces carbon emissions and lowers utility bills—and against which FPL had waged a decade-long counterinsurgency campaign.

FPL, which declined to comment for this article, prevailed on all counts.

The company has steadfastly denied wrongdoing, although it does not dispute hiring Matrix. “They did good work,” then-CEO Silagy told me in June 2022. During the same interview, he admitted to authoring a January 2019 email about Sen. Rodríguez, wherein Silagy ordered his minions “to make his life a living hell”—a directive that was immediately relayed to Matrix.

White man in blue shirt.
Eric Silagy, the former president and CEO of Florida Power & LightMatias J. Ocner/Miami Herald/Zuma

The utility claims that two outside law firms, whose investigations FPL commissioned but has never made public, have cleared it of election-related liability or wrongdoing, despite reporting that suggests otherwise. The Orlando Sentinel, for example, reported that Silagy sometimes used an email pseudonym (Theodore Hayes) when communicating with Jeff Pitts, then CEO of Matrix. And a 2022 Federal Election Commission complaint accused five nonprofits linked to Pitts of “direct and serious violations of the Federal Election Campaign Act.”

The complaint, dismissed earlier this year after the partisan six-member commission deadlocked on a party-line vote, cites a memo Pitts sent to Silagy laying out how FPL could channel money covertly through a series of nonprofits and, ultimately, a super-PAC, to fund “‘political activities’ on both the state and federal level.” The complaint alleges that “the effect of this scheme would be to illegally hide the identities of the true source or sources of contributions.”  

“Unfortunately, partisan gridlock and dysfunction has become routine at the FEC, which has only opened four investigations this year,” says Stuart McPhail, senior litigation counsel at Citizens for Responsibility and Ethics in Washington, the nonprofit that filed the complaint. “That means many complaints, even those for which the FEC’s nonpartisan expert staff recommends an investigation, end in partisan gridlock. That’s exactly what happened with our complaint.”

The scenes to follow are based on thousands of pages of documents and more than 50 interviews with various players. In addition to setting the stage for Artiles’ long-delayed trial, they offer a window into how some utility monopolies have chosen to flex their political power, pushing legal boundaries for financial gain, and sometimes thwarting America’s transition to clean energy in the process.

On a Friday evening in late February 2017, 32 NASCAR race-truck drivers squinted under the Daytona International Speedway’s 2,000-watt lights. Their eyes were fixed on state Sen. Frank Artiles, who sported a suede jacket emblazoned with the NextEra logo. He waved a green flag to kick off the 250-mile race, sponsored by NextEra Energy Resources, another NextEra subsidiary, but just two laps in things went awry—a 17-vehicle pile-up that resulted in one of the trucks getting completely totaled.

Your high school English teacher would call this foreshadowing.

Man in brown jacket standing in the middle of a man and woman in white race car driving suits.
Artiles, then-chairman of the Florida Senate’s energy and utilities committee, poses with race officials at Daytona Beach International Speedway on February 24, 2017.Facebook/Frank Artiles/Floodlight

Artiles was then serving his first term in the Florida Senate and chairing its energy committee. That is to say, the elected official who controlled the fate of state bills related to energy and the environment was accepting the red-carpet treatment from a utility holding company that routinely had business before his committee.

Such potential conflicts of interest are not unusual in the utility realm. Investor-owned power companies specialize in charming and lobbying legislators and regulators. A captured regulator might approve a higher profit margin for a power company than an adversarial one would. A friendly legislator is more likely to pass favorable laws. Across the nation, utilities are the most active lobbyists on state environmental bills.

Our system “gives utilities incredible incentive to build out massive, sophisticated, elaborate, sometimes clandestine political influence machines.”

What makes the situation especially irksome is that utilities are not normal companies. The firms that provide gas and electricity and send monthly bills to homeowners and businesses are state-sanctioned monopolies. They don’t make money from selling power per se. Rather, like a waiter with guaranteed tips, their profit margins are pre-determined by regulators based on how much they invest in their infrastructure. The more plants and poles and substations a utility builds, the bigger its guaranteed return, which averages about 10 percent nationwide. (FPL’s have run as high as 11.8 percent.) Politicians and regulators, at least in theory, are supposed to act on behalf of consumers and prevent utilities from running up the tab.

The way the system is set up “gives utilities incredible incentive to build out massive, sophisticated, elaborate, sometimes clandestine political influence machines,” says David Pomerantz, executive director of the Energy and Policy Institute, a nonprofit utility watchdog. “No matter how you slice it,” he adds, “they are among the biggest spenders on political influence generally.”

The numbers are staggering. According to the Institute for Local Self Reliance, an energy think tank, investor-owned utilities have given more than $130 million to federal candidates over the past decade and have spent more than $294 million on state political races between 2014 and 2023.

FPL alone donated at least $42 million to Florida lawmakers between June 2013 and June 2023, according to a Floodlight analysis. And that’s just reported donations. Across the nation, from 2014 to 2020, power companies pumped at least $215 million more into politics via 501(c)(4) nonprofits that don’t have to reveal their donors—which is why these funds are referred to as “dark money.”

Utility influence operations have led to a generational resurgence of fraud and corruption in the sector. A recent Floodlight analysis of three decades of corporate prosecutions and federal lawsuits describes malfeasance that has cost electricity customers at least $6.6 billion over the past 10 years. The costs to the environment and the energy transition are also steep. Utilities in Ohio struck a corrupt bargain with prominent state lawmakers—some of whom were convicted and sentenced to prison—to prop up failing coal and nuclear plants. Utilities in Arizona were investigated by the FBI for using dark money to elect energy regulators who slashed rooftop solar incentives, though no charges have been filed.

Artiles’ Daytona junket didn’t break any laws, but the optics weren’t great. He’d flown in on a private plane that belonged to his campaign treasurer—an FPL lobbyist. The night of the NASCAR race, he took in $10,000 in contributions at a fundraiser in his honor, where he rubbed shoulders with Keanu Reeves. The next day, he visited Disney’s Epcot Center as the guest of John Holley, FPL’s top in-house lobbyist. “It was an honor to be there,” Artiles told the Miami Herald after the news got out. “I’m not going to lie to you. It was cool.”

After returning to Tallahassee, Artiles fast-tracked two bills coveted by FPL.

But like the truck totaled during that second lap at Daytona, the freshman senator’s tenure would be short-lived. About a month after the FPL junket, Artiles got into an argument with two Black fellow senators at a private club near the state Capitol, berating them and using the n-word. The Senate president made Artiles stand and apologize to his colleagues, after which Artiles walked straight out of the chamber and into a gaggle of reporters, shedding his conciliatory tone like a football player doffing sweaty pads. This prompted the legislative Black caucus to demand his expulsion. Artiles resigned two days later.

Two men in grey suits smile and shake hands.
Then–Florida state Rep. Frank Artiles (R-Miami) is congratulated by Rep. Alan Williams (D-Tallahassee) in 2016. Artiles resigned from the Senate the following year after making racist remarks.Scott Keeler/Tampa Bay Times/Zuma

He was out of the Senate, but not the game. In October 2017, Artiles was invited to a lunch meeting with Ryan Tyson, then a leading Republican operative for Associated Industries of Florida, a powerful trade group to which FPL had donated millions. Tyson, a pollster, had done work on issues critical to FPL, and was executive director of Let’s Preserve the American Dream—a nonprofit that would play a key role in the ghost candidate scandal. Alex Alvarado, Tyson’s protégé, set up the lunch, which Tyson says he does not recall attending. Starting that same month, and continuing into 2021, Artiles would receive $5,000 monthly payments from Tyson for “research services” related to Hispanic voters.

After the 2020 election, Tyson and his group came under the scrutiny of the prosecutors. “We waived all privileges and co-operated with the government in its investigation,” he told me recently. “They couldn’t explain to us what they were looking for, but we were nonetheless cooperative.” (Tyson was never charged with wrongdoing.) “This is crazy that this is how law-abiding tax paying cooperative citizens are treated,” he said.

Chuck’s, a fish house in suburban Birmingham, Alabama, was bustling on the evening of October 26, 2021, when a former Pat Buchanan staffer named K.B. Forbes arrived for what he thought was dinner with Jeff Pitts, who until recently had been CEO of Matrix.

Black and white photo of man in suit smiling.
Jeff Pitts, the former CEO of Matrix , had a major falling out with the firm’s founder.Floodlight

A few months earlier, Joe Perkins, Matrix’s founder, had sued Pitts, his longtime employee and erstwhile protégé. The suit, which had FPL and two of its executives as “fictitious” (unnamed) co-defendants, basically accused Pitts of running his own firm within the firm, stealing Matrix’s clients and cash, operating a clandestine network of dark money groups, and working for FPL without Perkins’s knowledge. (Pitts, in legal filings, denied all of these claims.)

At first, their split had seemed like an amicable, if unexpected, business divorce. “Joe Perkins flew Jeff Pitts down on his plane to meet with me personally to let me know that they had come to an agreement that they were going to part ways, and it was okay,” Silagy said during our 2022 interview. “And then apparently, somewhere along the way, Jeff and Joe got sideways.”

This much was clear: For a decade, Matrix had been the servant of two masters, working both for Southern Co., the nation’s second-largest utility holding company, and NextEra Energy. But as the partners’ acrimony grew, so did the friction between the energy giants. Forbes, who publishes a blog critical of Alabama Power, a Southern Co. subsidiary, told me he had gone to Chuck’s in the hope of obtaining damaging information about Alabama Power’s CEO, Mark Crosswhite. But the vibe was off, and the conversation awkward.

Pitts “was a nervous wreck,” Forbes recalled. “That’s why, on my blog, I call him Jittery Jeff.”

The lawsuit came at a difficult time for Pitts. His new firm, Canopy Partners, less than a year old, was already drawing law enforcement interest. The Miami-Dade Public Corruption Task Force had obtained sworn testimony from Abigail MacIver, one of Pitts’ co-founders, in exchange for limited immunity from prosecution in the ghost candidate scandal. MacIver laid out how she, Pitts, and a contractor had channeled money from a nonprofit operated by Tyson into political committees controlled by Alvarado, Tyson’s associate, by way of a tax-exempt group Pitts controlled. Those committees paid for the ghost candidate mailers.

This voter mailer promoting ghost candidate Jestine Iannotti was criticized for seeming to suggest that Iannotti, who is white, is a Black woman.Floodlight

Reporting from the Sentinel also tied Pitts’ dark-money network to an FPL-funded campaign to defeat a ballot initiative that would have introduced competition into state energy markets and broken FPL’s monopoly. Tyson worked as a pollster on the campaign to counter the initiative. (Neither Pitts nor any Canopy Partners associates have been charged with crimes.)

Pitts is a dapper guy in his early 50s who brings to mind Fred Astaire. He was one of the first employees at Matrix in 1995 and became the director of its Birmingham office in 2009. He enjoys the good life, according to former associates: steak dinners, private flights, expensive wine. But by the time he met with Forbes, his life had grown complicated. “He could not look me in the eye,” Forbes told me, and Pitts wouldn’t stop rubbing the back of his head with his left hand during their dinner: “He was twirling his hair in circles.”

“These are types of allegations and scandals that shatter the belief that this publicly regulated utility is a safe, secure, and non-volatile investment.”

Matrix began consulting for NextEra, FPL’s parent, in the early 2010s. Pitts took extraordinary care to conceal his—and FPL’s—involvement in Florida elections. He obscured the money trail by creating multiple layers of subcontractors, shell companies, and 501(c)(4) nonprofits. In one case, he listed the brother of a Matrix subcontractor as the head of several nonprofits in his network, which he registered in faraway states. He preferred in-person conversations to texts or phone calls and hired expensive tax attorneys to advise him on his moves.

FPL was kept apprised of the work. Flight records show that the Matrix company jet made frequent visits to Palm Beach, where the utility is headquartered, and the leaked documents contain lively text and email correspondences between Pitts and its executives. FPL’s public affairs VPs were forwarded drafts of political ads slated to run against candidates they hoped to defeat. The Matrix document trove also included emails between Pitts and Silagy wherein Pitts lists names of dark money nonprofits and political committees to which Silagy could donate. There was also a Matrix invoice seeking reimbursement for incorporating a nonprofit that helped fund the ghost candidate campaigns.

A generation ago, power companies were forced to disclose the names of their consultants and attorneys, but the Federal Energy Regulatory Commission, which oversees the industry, did away with the rule in 2002. Jon Wellinghoff, FERC’s chairman from 2009 to 2013, told me he regrets not reinstating it. “We didn’t reverse that when I was chairman,” he said, “And we should have. All that should be disclosed. All that should be open to the public and available—information right down to the $100 contribution.”

Pitts didn’t end up staying for dinner at Chuck’s. He got takeout instead, Forbes says, and never forked over the dirt on Alabama Power’s CEO. Neither did Pitts’ attorney, with whom Forbes kept corresponding until he grew too frustrated: “I was livid. I was like, ‘This is a waste of my time.’”

It was opening day of the 2023 session of the Florida Legislature, and the capitol was abuzz. House Speaker Paul Renner presided over his chamber’s opening ceremonies, introducing a dozen former members in attendance. Among them was Frank Artiles, who, despite his legal troubles, had maintained close ties with some of Florida’s Republican power brokers. He would register as a lobbyist that session—for a construction company that paints traffic lanes.

Twenty-nine months had passed since the Fitzpatrick’s election party, and two years since Artiles’ arrest and indictment. Pitts and Perkins had by this time settled their lawsuit, and Silagy had recently taken his leave from FPL.

Police take pictures of Artiles’ car during a raid at his home in Palmetto Bay, March 17, 2021.Pedro Portal/Miami Herald/Floodlight

The utility’s veil of secrecy had been pierced—at least temporarily. Weeks after the meeting between Pitts and Forbes, the first batch of Matrix records arrived at the offices of the Sentinel in an envelope with no return address. The intel consisted of a heavily redacted copy of a nearly 200-page report Perkins had sent to NextEra’s board of directors in November 2021. It detailed Pitts’ allegedly secret work for FPL, efforts ranging from municipal to congressional campaigns, funded by millions in utility cash.

In 2018 alone, the report revealed, Pitts had participated in campaigns against a South Miami mayor who supported rooftop solar, ran ghost candidates against both a Miami-Dade commissioner critical of an FPL nuclear plant and a progressive state Senate candidate in Gainesville, and moved millions of dollars to help defeat Democratic gubernatorial nominee Andrew Gillum, who lost to Ron DeSantis that year by a razor-thin 0.4 percent margin.

Pitts’ work, the report showed, went beyond elections and into acquisitions. In 2019, Pitts had aided in FPL’s failed attempt to acquire the Jacksonville Electric Authority, a city-owned utility whose territory it coveted. His contributions included hiring a private detective to follow a reporter who’d written critically of the proposed sale, running a front group that championed the sale, and enlisting a contractor to offer Garrett Dennis—a Jacksonville councilman seen as unlikely to support the sale—a $250,000-a-year job with the same dark money group, Grow United, that distributed the ghost candidate funds to the other nonprofits. Accepting the position would mean giving up his council seat. (Dennis didn’t bite.)

The leaked records also detailed how Matrix and Pitts had paid at least $900,000 to six pay-to-play news outlets in Florida and Alabama between 2013 and 2020. The outlets, with more than 1.3 million combined monthly viewers, attacked critics and enemies of Southern Co., FPL, and other Matrix clients, though all of them deny that the payments influenced their coverage.

“These are types of allegations and scandals that shatter the belief that this publicly regulated utility is a safe, secure, and non-volatile investment,” the attorneys in a federal securities suit filed against NextEra in December 2023 wrote of the revelations. It was one of at least two class-action suits filed against the company since Silagy’s resignation alleging political impropriety.

The proceedings in the shareholder suit have been telling, though perhaps not in the way the plaintiffs would prefer. At a hearing this past May, federal district court Judge Aileen Cannon asked their attorneys to clarify the case against NextEra. “Just so I understand,” she said, “has there been any finding of liability…We talk about, sort of, allegations of wrongdoing and criminality. Can you just pinpoint exactly what would be the crime and has there been any finding of such a crime?”

“Artiles is the victim in this case!” his lawyer told me. “He’s the one that quote got fucked on fake scams, on fraudulent business deals that didn’t exist.”

Plaintiffs attorney Jeffrey Block responded in the negative.      

“So, I guess, what exactly is wrong that was allegedly done?” Cannon said.      

Her question, albeit unwittingly, broaches a bigger issue, with ramifications far beyond Florida. The IRS and the FEC have generally failed to enforce nonprofit and election laws effectively. At the state level, regulatory boards are easily influenced—and their penalties for breaking the rules, to the extent they are imposed, are often too small to discourage bad behavior.

It is a system that practically invites monopoly power companies and their consultants to exploit every loophole to maximize political leverage and profit—and even, in some cases, to spend money collected from power consumers to lobby for actions that run counter to those ratepayer’s interests. “It’s ludicrous on its face that state-granted monopolies that provide an essential service are allowed to lobby at all. It ought to be unthinkable,” energy expert David Roberts noted during a 2023 discussion of utility corruption on his podcast, Volts.

The notion of a monopoly utility launching a secret effort to field bogus candidates and trick voters would seem all the more unthinkable, and the fact that a federal judge feels compelled to ask what the company is actually alleged to have done wrong is telling.

Back in January, public corruption prosecutor Tim VanderGiesen told Cannon he intended to follow the money, although it’s not clear how far up the chain he intends to go. “It’s the money, the payment, that makes this illegal, judge,” he asserted then. The state’s position is, look at all the trouble that they were going through to run…ghost candidates.”

As for Artiles’ alleged ghost candidate activities, “It’s my opinion that this case is politically motivated,” defense attorney Quintero told a Miami-Dade Circuit Court judge during a hearing earlier this year. “It’s not just one party that does it. It’s both parties and it’s perfectly legal. Period. End of story.”

Man in mask, sunglasses and red baseball hat.
Ghost candidate Alex Rodriguez leaves the Turner Guilford Knight Correctional Center in Miami after posting bail on March 18, 2021. Rodriguez, facing several charges, agreed to testify against Artiles in exchange for leniency.Matias J. Ochner/Miami Herald/Floodlight

The state’s star witness this week is none other than ghost candidate Alex Rodriguez, who agreed to plead guilty to some charges and testify against Artiles to avoid a possible prison sentence. The defendant’s legal team is attempting to impugn Rodriguez’s character and portray the money that changed hands between the two men as a con. “Artiles is the victim in this case!” Quintero told me. “He’s the one that quote got fucked on fake scams, on fraudulent business deals that didn’t exist, on loans, on a car Rodriguez sold to him that didn’t exist.”

The jury is expected to decide on the guilt or innocence of Frank Artiles by the end of September. Yet after all the courtroom dramas, feuding consultants, and exposés about the financial subterfuge that enabled the ghost candidates, it remains unclear when, and whether, and to what extent, anyone will ever hold NextEra accountable.

“The system is on trial, because the system enables this kind of conduct,” Dave Aronberg, the Palm Beach County state attorney, told me of Artiles’ trial. “In a fully functioning democracy, this kind of scandal would result in real changes to campaign finance laws. But Florida doesn’t have a fully functioning democracy.”

Florida “Ghost Candidates” Scandal Puts the Entire Utility Sector on Trial

18 September 2024 at 10:00

This story was reported by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

Liam Fitzpatrick’s was packed on a Tuesday in November, and all eyes in the suburban Orlando, Florida, pub were glued to the TVs behind the bar. Fitzpatrick’s usually had sports on, but this was Election Eve 2020, and Republican state Senate candidate Jason Brodeur watched nervously as the results trickled in. This was his election party. Brodeur’s campaign had spent millions of dollars running him for an open seat against the Democratic nominee, a labor attorney, and the race was neck and neck.

But his backers had a secret weapon. Just before the filing deadline, a substitute teacher named Jestine Iannotti had joined the race as an unaffiliated third-party candidate. A political unknown, she didn’t even campaign. The central Florida district was then carpeted with misleading mailers that appealed to liberal values and voters’ distaste for partisan politics—one included a stock photo that seemed to imply that Iannotti, who is white, is a Black woman. If she siphoned off votes from his Democratic rival, Brodeur stood a better chance.

Iannotti was a “ghost candidate,” one with no hope of winning who runs—or is run—specifically as a spoiler. Ghost candidates are legal in Florida—sort of. Any eligible person can run for public office, but the covert financing of ghost campaigns sometimes runs afoul of even that state’s famously lax election laws. State prosecutors would eventually conclude that Iannotti and another ghost candidate who ran in 2020—along with their political consultants—had broken quite a few. (Brodeur claimed ignorance of the scheme, and has faced no legal action as a result, though a local tax collector on trial for unrelated charges would later testify that Brodeur was well aware of it.)

Also at Fitzpatrick’s that night was then-47-year-old Frank Artiles, a burly, foul-mouthed ex-Marine and former Republican state senator. Artiles, who is Cuban American, had resigned his Senate post in disgrace in 2017 after using racial slurs in front of two Black colleagues during a drunken rant. He, too, was fixated on Brodeur’s returns, as well as the results of an even tighter state Senate race in south Miami-Dade.

Man wearing a mask wearing a white shirt surrounded by TV cameras.
Frank Artiles leaves the Turner Guilford Knight Correctional Center in Miami on March 18, 2021, after posting bail in a case related to Florida’s 2020 District 37 state Senate campaign.Matias J. Ochner/Miami Herald/Floodlight

The latter contest was a slugfest between one of Florida’s highest-profile Democratic lawmakers, José Javier Rodriguez, and Republican Ileana García, founder of Latinas for Trump. It, too, hinged on a ghost candidate: Alex Rodriguez, a down-on-his-luck salesman of used heavy equipment, whose shared surname with the incumbent was no coincidence. Like Iannotti, Rodriguez hadn’t campaigned. He, too, was boosted by a flood of misleading mailers. 

As the final tallies came in, the mood at Fitzpatrick’s turned electric. Brodeur ended up winning his seat by about 7,600 votes. (Iannotti drew nearly 6,000.) In south Miami-Dade, Garcia, the Republican, edged out incumbent José Rodriguez by fewer than 40 votes. Artiles was jubilant. “That was me!” a partygoer recalls him yelling. “That’s all me!”

At a criminal trial this week in Miami, the prosecution may ask the jury to interpret Artiles’ outburst as an admission of guilt. Four months after the election party, the Miami-Dade state attorney charged him and ghost candidate Rodriquez with multiple campaign finance–related felonies. Among other charges, Artiles stands accused of conspiracy, making excessive campaign contributions, and “false swearing” in connection with voting or elections. If found guilty on all counts, he faces up to five years in prison.

In Central Florida, prosecutors issued a multi-count indictment against Iannotti and the two operatives (Eric Foglesong and Ben Paris, chair of the Seminole County Republican Party) who’d arranged for her to run. (A ghost candidate Artiles had recruited for a third state Senate race—a spa owner whose wife regularly waxed Artiles’ back—was not charged.) In 2022, a jury found Paris guilty of interfering in an election by means of an illegal campaign donation—the state recommended 60 days in jail; the judge gave him a year of probation, community service, and a fine. Foglesong, charged with felony and misdemeanor election crimes, avoided possible jail time by pleading no contest to misdemeanor charges, and Iannotti pleaded no contest last month to a pair of first-degree misdemeanors. Artiles maintains his innocence.

In a December 2023 deposition, political consultant Patrick Bainter told Florida prosecutors that he hired former state Sen. Frank Artiles to run “independent” candidates to help solidify the Senate’s Republican majority.Floodlight

And all of the above might have been just another colorful tale of shady politics in the Sunshine State were it not for a spat between political consultants.

Indeed, after the leaders of Matrix LLC, a high-powered political consulting firm whose CEO helped finance the ghost campaigns, started feuding, the story took on a new life, offering something rarer and more consequential: a glimpse, oddly enough, into the political meddling of one of America’s largest power companies.

The source of the leak was never clear, but as the consultants squabbled, thousands of pages of Matrix’s internal documents made it into the hands of Florida news outlets. The revelations therein, and reporting on discovery materials generated by the various prosecutions, would culminate in the abrupt January 2023 retirement of Florida Power & Light CEO Eric Silagy, triggering a single-day, $14 billion drop in the company’s market value.

FPL is a subsidiary of NextEra Energy, one of the nation’s largest utility conglomerates in terms of homes and businesses served. And although its parent is a major producer of renewable energy, FPL is among Florida’s biggest greenhouse-gas emitters. The leaked documents, in any case, showed that FPL was enmeshed in a covert campaign of media manipulation, surveillance, and what one federal securities lawsuit calls electoral “dirty tricks,” all in the name of maximizing profits.

Investigations by Floodlight and other Florida news outlets would reveal that the ghost candidates were bankrolled with some $730,000 in dark money, $100,000 of which was channeled through a prominent Republican operative into a 501(c)(4) nonprofit that Artiles controlled. (Artiles’ attorney, Frank Quintero, disputes that any of that money ever made it to ghost candidate Rodriguez: “The prosecutor can say whatever the fuck he wants, but the reality is different than what he wants it to be.”) The remaining $630,000 made its way through a daisy chain of opaque nonprofits partially overseen by the CEO of Matrix, which was then working for FPL.

In this undated email obtained by Floodlight via public records request, Artiles offers advice to political consultant Patrick Bainter related to running a ghost candidate in the 2020 election.Floodlight

From the utility’s perspective, expanding the state Senate’s Republican majority—by whatever means—would help fulfill its legislative priorities. Those priorities included escaping liability for damages related to power outages in the wake of Hurricane Irma; ousting J.R. Kelly, the state’s long-serving (unsympathetic) consumer utility watchdog; and winning approval from the Senate-confirmed Public Service Commission for Florida’s largest-ever hike in electricity rates. The defeat of Sen. Rodriguez had the added benefit of kneecapping one of the state’s most prominent backers of rooftop solar, which reduces carbon emissions and lowers utility bills—and against which FPL had waged a decade-long counterinsurgency campaign.

FPL, which declined to comment for this article, prevailed on all counts.

The company has steadfastly denied wrongdoing, although it does not dispute hiring Matrix. “They did good work,” then-CEO Silagy told me in June 2022. During the same interview, he admitted to authoring a January 2019 email about Sen. Rodríguez, wherein Silagy ordered his minions “to make his life a living hell”—a directive that was immediately relayed to Matrix.

White man in blue shirt.
Eric Silagy, the former president and CEO of Florida Power & LightMatias J. Ocner/Miami Herald/Zuma

The utility claims that two outside law firms, whose investigations FPL commissioned but has never made public, have cleared it of election-related liability or wrongdoing, despite reporting that suggests otherwise. The Orlando Sentinel, for example, reported that Silagy sometimes used an email pseudonym (Theodore Hayes) when communicating with Jeff Pitts, then CEO of Matrix. And a 2022 Federal Election Commission complaint accused five nonprofits linked to Pitts of “direct and serious violations of the Federal Election Campaign Act.”

The complaint, dismissed earlier this year after the partisan six-member commission deadlocked on a party-line vote, cites a memo Pitts sent to Silagy laying out how FPL could channel money covertly through a series of nonprofits and, ultimately, a super-PAC, to fund “‘political activities’ on both the state and federal level.” The complaint alleges that “the effect of this scheme would be to illegally hide the identities of the true source or sources of contributions.”  

“Unfortunately, partisan gridlock and dysfunction has become routine at the FEC, which has only opened four investigations this year,” says Stuart McPhail, senior litigation counsel at Citizens for Responsibility and Ethics in Washington, the nonprofit that filed the complaint. “That means many complaints, even those for which the FEC’s nonpartisan expert staff recommends an investigation, end in partisan gridlock. That’s exactly what happened with our complaint.”

The scenes to follow are based on thousands of pages of documents and more than 50 interviews with various players. In addition to setting the stage for Artiles’ long-delayed trial, they offer a window into how some utility monopolies have chosen to flex their political power, pushing legal boundaries for financial gain, and sometimes thwarting America’s transition to clean energy in the process.

On a Friday evening in late February 2017, 32 NASCAR race-truck drivers squinted under the Daytona International Speedway’s 2,000-watt lights. Their eyes were fixed on state Sen. Frank Artiles, who sported a suede jacket emblazoned with the NextEra logo. He waved a green flag to kick off the 250-mile race, sponsored by NextEra Energy Resources, another NextEra subsidiary, but just two laps in things went awry—a 17-vehicle pile-up that resulted in one of the trucks getting completely totaled.

Your high school English teacher would call this foreshadowing.

Man in brown jacket standing in the middle of a man and woman in white race car driving suits.
Artiles, then-chairman of the Florida Senate’s energy and utilities committee, poses with race officials at Daytona Beach International Speedway on February 24, 2017.Facebook/Frank Artiles/Floodlight

Artiles was then serving his first term in the Florida Senate and chairing its energy committee. That is to say, the elected official who controlled the fate of state bills related to energy and the environment was accepting the red-carpet treatment from a utility holding company that routinely had business before his committee.

Such potential conflicts of interest are not unusual in the utility realm. Investor-owned power companies specialize in charming and lobbying legislators and regulators. A captured regulator might approve a higher profit margin for a power company than an adversarial one would. A friendly legislator is more likely to pass favorable laws. Across the nation, utilities are the most active lobbyists on state environmental bills.

Our system “gives utilities incredible incentive to build out massive, sophisticated, elaborate, sometimes clandestine political influence machines.”

What makes the situation especially irksome is that utilities are not normal companies. The firms that provide gas and electricity and send monthly bills to homeowners and businesses are state-sanctioned monopolies. They don’t make money from selling power per se. Rather, like a waiter with guaranteed tips, their profit margins are pre-determined by regulators based on how much they invest in their infrastructure. The more plants and poles and substations a utility builds, the bigger its guaranteed return, which averages about 10 percent nationwide. (FPL’s have run as high as 11.8 percent.) Politicians and regulators, at least in theory, are supposed to act on behalf of consumers and prevent utilities from running up the tab.

The way the system is set up “gives utilities incredible incentive to build out massive, sophisticated, elaborate, sometimes clandestine political influence machines,” says David Pomerantz, executive director of the Energy and Policy Institute, a nonprofit utility watchdog. “No matter how you slice it,” he adds, “they are among the biggest spenders on political influence generally.”

The numbers are staggering. According to the Institute for Local Self Reliance, an energy think tank, investor-owned utilities have given more than $130 million to federal candidates over the past decade and have spent more than $294 million on state political races between 2014 and 2023.

FPL alone donated at least $42 million to Florida lawmakers between June 2013 and June 2023, according to a Floodlight analysis. And that’s just reported donations. Across the nation, from 2014 to 2020, power companies pumped at least $215 million more into politics via 501(c)(4) nonprofits that don’t have to reveal their donors—which is why these funds are referred to as “dark money.”

Utility influence operations have led to a generational resurgence of fraud and corruption in the sector. A recent Floodlight analysis of three decades of corporate prosecutions and federal lawsuits describes malfeasance that has cost electricity customers at least $6.6 billion over the past 10 years. The costs to the environment and the energy transition are also steep. Utilities in Ohio struck a corrupt bargain with prominent state lawmakers—some of whom were convicted and sentenced to prison—to prop up failing coal and nuclear plants. Utilities in Arizona were investigated by the FBI for using dark money to elect energy regulators who slashed rooftop solar incentives, though no charges have been filed.

Artiles’ Daytona junket didn’t break any laws, but the optics weren’t great. He’d flown in on a private plane that belonged to his campaign treasurer—an FPL lobbyist. The night of the NASCAR race, he took in $10,000 in contributions at a fundraiser in his honor, where he rubbed shoulders with Keanu Reeves. The next day, he visited Disney’s Epcot Center as the guest of John Holley, FPL’s top in-house lobbyist. “It was an honor to be there,” Artiles told the Miami Herald after the news got out. “I’m not going to lie to you. It was cool.”

After returning to Tallahassee, Artiles fast-tracked two bills coveted by FPL.

But like the truck totaled during that second lap at Daytona, the freshman senator’s tenure would be short-lived. About a month after the FPL junket, Artiles got into an argument with two Black fellow senators at a private club near the state Capitol, berating them and using the n-word. The Senate president made Artiles stand and apologize to his colleagues, after which Artiles walked straight out of the chamber and into a gaggle of reporters, shedding his conciliatory tone like a football player doffing sweaty pads. This prompted the legislative Black caucus to demand his expulsion. Artiles resigned two days later.

Two men in grey suits smile and shake hands.
Then–Florida state Rep. Frank Artiles (R-Miami) is congratulated by Rep. Alan Williams (D-Tallahassee) in 2016. Artiles resigned from the Senate the following year after making racist remarks.Scott Keeler/Tampa Bay Times/Zuma

He was out of the Senate, but not the game. In October 2017, Artiles was invited to a lunch meeting with Ryan Tyson, then a leading Republican operative for Associated Industries of Florida, a powerful trade group to which FPL had donated millions. Tyson, a pollster, had done work on issues critical to FPL, and was executive director of Let’s Preserve the American Dream—a nonprofit that would play a key role in the ghost candidate scandal. Alex Alvarado, Tyson’s protégé, set up the lunch, which Tyson says he does not recall attending. Starting that same month, and continuing into 2021, Artiles would receive $5,000 monthly payments from Tyson for “research services” related to Hispanic voters.

After the 2020 election, Tyson and his group came under the scrutiny of the prosecutors. “We waived all privileges and co-operated with the government in its investigation,” he told me recently. “They couldn’t explain to us what they were looking for, but we were nonetheless cooperative.” (Tyson was never charged with wrongdoing.) “This is crazy that this is how law-abiding tax paying cooperative citizens are treated,” he said.

Chuck’s, a fish house in suburban Birmingham, Alabama, was bustling on the evening of October 26, 2021, when a former Pat Buchanan staffer named K.B. Forbes arrived for what he thought was dinner with Jeff Pitts, who until recently had been CEO of Matrix.

Black and white photo of man in suit smiling.
Jeff Pitts, the former CEO of Matrix , had a major falling out with the firm’s founder.Floodlight

A few months earlier, Joe Perkins, Matrix’s founder, had sued Pitts, his longtime employee and erstwhile protégé. The suit, which had FPL and two of its executives as “fictitious” (unnamed) co-defendants, basically accused Pitts of running his own firm within the firm, stealing Matrix’s clients and cash, operating a clandestine network of dark money groups, and working for FPL without Perkins’s knowledge. (Pitts, in legal filings, denied all of these claims.)

At first, their split had seemed like an amicable, if unexpected, business divorce. “Joe Perkins flew Jeff Pitts down on his plane to meet with me personally to let me know that they had come to an agreement that they were going to part ways, and it was okay,” Silagy said during our 2022 interview. “And then apparently, somewhere along the way, Jeff and Joe got sideways.”

This much was clear: For a decade, Matrix had been the servant of two masters, working both for Southern Co., the nation’s second-largest utility holding company, and NextEra Energy. But as the partners’ acrimony grew, so did the friction between the energy giants. Forbes, who publishes a blog critical of Alabama Power, a Southern Co. subsidiary, told me he had gone to Chuck’s in the hope of obtaining damaging information about Alabama Power’s CEO, Mark Crosswhite. But the vibe was off, and the conversation awkward.

Pitts “was a nervous wreck,” Forbes recalled. “That’s why, on my blog, I call him Jittery Jeff.”

The lawsuit came at a difficult time for Pitts. His new firm, Canopy Partners, less than a year old, was already drawing law enforcement interest. The Miami-Dade Public Corruption Task Force had obtained sworn testimony from Abigail MacIver, one of Pitts’ co-founders, in exchange for limited immunity from prosecution in the ghost candidate scandal. MacIver laid out how she, Pitts, and a contractor had channeled money from a nonprofit operated by Tyson into political committees controlled by Alvarado, Tyson’s associate, by way of a tax-exempt group Pitts controlled. Those committees paid for the ghost candidate mailers.

This voter mailer promoting ghost candidate Jestine Iannotti was criticized for seeming to suggest that Iannotti, who is white, is a Black woman.Floodlight

Reporting from the Sentinel also tied Pitts’ dark-money network to an FPL-funded campaign to defeat a ballot initiative that would have introduced competition into state energy markets and broken FPL’s monopoly. Tyson worked as a pollster on the campaign to counter the initiative. (Neither Pitts nor any Canopy Partners associates have been charged with crimes.)

Pitts is a dapper guy in his early 50s who brings to mind Fred Astaire. He was one of the first employees at Matrix in 1995 and became the director of its Birmingham office in 2009. He enjoys the good life, according to former associates: steak dinners, private flights, expensive wine. But by the time he met with Forbes, his life had grown complicated. “He could not look me in the eye,” Forbes told me, and Pitts wouldn’t stop rubbing the back of his head with his left hand during their dinner: “He was twirling his hair in circles.”

“These are types of allegations and scandals that shatter the belief that this publicly regulated utility is a safe, secure, and non-volatile investment.”

Matrix began consulting for NextEra, FPL’s parent, in the early 2010s. Pitts took extraordinary care to conceal his—and FPL’s—involvement in Florida elections. He obscured the money trail by creating multiple layers of subcontractors, shell companies, and 501(c)(4) nonprofits. In one case, he listed the brother of a Matrix subcontractor as the head of several nonprofits in his network, which he registered in faraway states. He preferred in-person conversations to texts or phone calls and hired expensive tax attorneys to advise him on his moves.

FPL was kept apprised of the work. Flight records show that the Matrix company jet made frequent visits to Palm Beach, where the utility is headquartered, and the leaked documents contain lively text and email correspondences between Pitts and its executives. FPL’s public affairs VPs were forwarded drafts of political ads slated to run against candidates they hoped to defeat. The Matrix document trove also included emails between Pitts and Silagy wherein Pitts lists names of dark money nonprofits and political committees to which Silagy could donate. There was also a Matrix invoice seeking reimbursement for incorporating a nonprofit that helped fund the ghost candidate campaigns.

A generation ago, power companies were forced to disclose the names of their consultants and attorneys, but the Federal Energy Regulatory Commission, which oversees the industry, did away with the rule in 2002. Jon Wellinghoff, FERC’s chairman from 2009 to 2013, told me he regrets not reinstating it. “We didn’t reverse that when I was chairman,” he said, “And we should have. All that should be disclosed. All that should be open to the public and available—information right down to the $100 contribution.”

Pitts didn’t end up staying for dinner at Chuck’s. He got takeout instead, Forbes says, and never forked over the dirt on Alabama Power’s CEO. Neither did Pitts’ attorney, with whom Forbes kept corresponding until he grew too frustrated: “I was livid. I was like, ‘This is a waste of my time.’”

It was opening day of the 2023 session of the Florida Legislature, and the capitol was abuzz. House Speaker Paul Renner presided over his chamber’s opening ceremonies, introducing a dozen former members in attendance. Among them was Frank Artiles, who, despite his legal troubles, had maintained close ties with some of Florida’s Republican power brokers. He would register as a lobbyist that session—for a construction company that paints traffic lanes.

Twenty-nine months had passed since the Fitzpatrick’s election party, and two years since Artiles’ arrest and indictment. Pitts and Perkins had by this time settled their lawsuit, and Silagy had recently taken his leave from FPL.

Police take pictures of Artiles’ car during a raid at his home in Palmetto Bay, March 17, 2021.Pedro Portal/Miami Herald/Floodlight

The utility’s veil of secrecy had been pierced—at least temporarily. Weeks after the meeting between Pitts and Forbes, the first batch of Matrix records arrived at the offices of the Sentinel in an envelope with no return address. The intel consisted of a heavily redacted copy of a nearly 200-page report Perkins had sent to NextEra’s board of directors in November 2021. It detailed Pitts’ allegedly secret work for FPL, efforts ranging from municipal to congressional campaigns, funded by millions in utility cash.

In 2018 alone, the report revealed, Pitts had participated in campaigns against a South Miami mayor who supported rooftop solar, ran ghost candidates against both a Miami-Dade commissioner critical of an FPL nuclear plant and a progressive state Senate candidate in Gainesville, and moved millions of dollars to help defeat Democratic gubernatorial nominee Andrew Gillum, who lost to Ron DeSantis that year by a razor-thin 0.4 percent margin.

Pitts’ work, the report showed, went beyond elections and into acquisitions. In 2019, Pitts had aided in FPL’s failed attempt to acquire the Jacksonville Electric Authority, a city-owned utility whose territory it coveted. His contributions included hiring a private detective to follow a reporter who’d written critically of the proposed sale, running a front group that championed the sale, and enlisting a contractor to offer Garrett Dennis—a Jacksonville councilman seen as unlikely to support the sale—a $250,000-a-year job with the same dark money group, Grow United, that distributed the ghost candidate funds to the other nonprofits. Accepting the position would mean giving up his council seat. (Dennis didn’t bite.)

The leaked records also detailed how Matrix and Pitts had paid at least $900,000 to six pay-to-play news outlets in Florida and Alabama between 2013 and 2020. The outlets, with more than 1.3 million combined monthly viewers, attacked critics and enemies of Southern Co., FPL, and other Matrix clients, though all of them deny that the payments influenced their coverage.

“These are types of allegations and scandals that shatter the belief that this publicly regulated utility is a safe, secure, and non-volatile investment,” the attorneys in a federal securities suit filed against NextEra in December 2023 wrote of the revelations. It was one of at least two class-action suits filed against the company since Silagy’s resignation alleging political impropriety.

The proceedings in the shareholder suit have been telling, though perhaps not in the way the plaintiffs would prefer. At a hearing this past May, federal district court Judge Aileen Cannon asked their attorneys to clarify the case against NextEra. “Just so I understand,” she said, “has there been any finding of liability…We talk about, sort of, allegations of wrongdoing and criminality. Can you just pinpoint exactly what would be the crime and has there been any finding of such a crime?”

“Artiles is the victim in this case!” his lawyer told me. “He’s the one that quote got fucked on fake scams, on fraudulent business deals that didn’t exist.”

Plaintiffs attorney Jeffrey Block responded in the negative.      

“So, I guess, what exactly is wrong that was allegedly done?” Cannon said.      

Her question, albeit unwittingly, broaches a bigger issue, with ramifications far beyond Florida. The IRS and the FEC have generally failed to enforce nonprofit and election laws effectively. At the state level, regulatory boards are easily influenced—and their penalties for breaking the rules, to the extent they are imposed, are often too small to discourage bad behavior.

It is a system that practically invites monopoly power companies and their consultants to exploit every loophole to maximize political leverage and profit—and even, in some cases, to spend money collected from power consumers to lobby for actions that run counter to those ratepayer’s interests. “It’s ludicrous on its face that state-granted monopolies that provide an essential service are allowed to lobby at all. It ought to be unthinkable,” energy expert David Roberts noted during a 2023 discussion of utility corruption on his podcast, Volts.

The notion of a monopoly utility launching a secret effort to field bogus candidates and trick voters would seem all the more unthinkable, and the fact that a federal judge feels compelled to ask what the company is actually alleged to have done wrong is telling.

Back in January, public corruption prosecutor Tim VanderGiesen told Cannon he intended to follow the money, although it’s not clear how far up the chain he intends to go. “It’s the money, the payment, that makes this illegal, judge,” he asserted then. The state’s position is, look at all the trouble that they were going through to run…ghost candidates.”

As for Artiles’ alleged ghost candidate activities, “It’s my opinion that this case is politically motivated,” defense attorney Quintero told a Miami-Dade Circuit Court judge during a hearing earlier this year. “It’s not just one party that does it. It’s both parties and it’s perfectly legal. Period. End of story.”

Man in mask, sunglasses and red baseball hat.
Ghost candidate Alex Rodriguez leaves the Turner Guilford Knight Correctional Center in Miami after posting bail on March 18, 2021. Rodriguez, facing several charges, agreed to testify against Artiles in exchange for leniency.Matias J. Ochner/Miami Herald/Floodlight

The state’s star witness this week is none other than ghost candidate Alex Rodriguez, who agreed to plead guilty to some charges and testify against Artiles to avoid a possible prison sentence. The defendant’s legal team is attempting to impugn Rodriguez’s character and portray the money that changed hands between the two men as a con. “Artiles is the victim in this case!” Quintero told me. “He’s the one that quote got fucked on fake scams, on fraudulent business deals that didn’t exist, on loans, on a car Rodriguez sold to him that didn’t exist.”

The jury is expected to decide on the guilt or innocence of Frank Artiles by the end of September. Yet after all the courtroom dramas, feuding consultants, and exposés about the financial subterfuge that enabled the ghost candidates, it remains unclear when, and whether, and to what extent, anyone will ever hold NextEra accountable.

“The system is on trial, because the system enables this kind of conduct,” Dave Aronberg, the Palm Beach County state attorney, told me of Artiles’ trial. “In a fully functioning democracy, this kind of scandal would result in real changes to campaign finance laws. But Florida doesn’t have a fully functioning democracy.”

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