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Utility’s Role in Convention Tests Obama

CHARLOTTE, N.C. — When Charlotte first emerged as the top contender to host the Democratic convention, its lead cheerleader was James E. Rogers, the outspoken chief executive of the hometown utility, Duke Energy. He promised to be a public face and a private fund-raiser for the effort.

President Barack Obama (L), James E. Rogers (R)
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President Barack Obama (L), James E. Rogers (R)

Mr. Rogers has not only solicited donations but has also arranged for his company to donate office space and guarantee a loan to the convention committee.

He cited local pride as motivation, but Duke Energy, which became the nation’s largest utility with its recent merger, also had a business incentive. The company, which has supported the energy initiatives of President Obama and Congressional Democrats, has received federal economic stimulus money and alternative-energy grants. Its financial future stands to be greatly influenced by the sorts of environmental proposals the president’s party has vowed to pursue.

The intersection of Duke Energy’s interests and its support for the convention is testing Mr. Obama’s pledge to free the party’s gathering from business and lobbyist support.

The situation is a microcosm of a larger issue that Mr. Obama’s campaign has faced. It has tried to balance the president’s longtime pledge to reduce the influence of special interests in politics with his real-world need to raise the huge amounts of money that modern campaigns require, at times in ways that seem to contradict those pledges.

Republicans are accusing the convention organizers of hypocrisy. Some Democrats are saying the White House set itself up for the charges by making a vow that was bound to be difficult to keep and that would risk alienating its business supporters.

Duke has found its task a thankless one. Some of its conservative shareholders have accused the company of getting too cozy with the administration. Some Democrats have complained that Mr. Rogers has not done enough to raise the money necessary for the convention. And whatever Mr. Rogers’s fund-raising success, it was not enough to stop a Democratic group from implying nefarious connections between the utility and the Republican candidate for governor here, Pat McCrory.

It is hardly what Obama campaign officials envisioned last year when they sent a note to supporters from Michelle Obama promising “a different convention for a different time.”

Some longtime Democratic fund-raisers viewed the restrictions as naïve at best, given that the sources of more than two-thirds of the money raised for the 2008 convention would be banned now, based on a study by the nonpartisan Campaign Finance Institute.

“There’s an inconsistency in trying to be purer than Caesar’s wife by not taking corporate money,” said Bob Farmer, a treasurer of Senator John Kerry’s 2004 presidential campaign. “It just makes it harder on his fund-raising team, and maybe they even have to cut some corners to make sure their coffers are filled.”

Campaign and convention officials said that they had received money from an “exponentially” greater number of individual donors to the convention as intended and that they had indisputably reduced their reliance on corporate help.

Neither party is reporting blockbuster convention fund-raising. Big donors now tend to be less interested in giving money for what is viewed as a big party than in giving it directly to the campaigns or to the outside groups playing such a big role this year. Republicans and Democrats alike say that they will meet their budgets but that they will probably have to continue seeking donations to the end.

The parties receive $18.2 million in public financing, but their programs are calling for about triple that. Neither would share fund-raising figures or details, which do not have to be made public until later this year.

Still, the job is that much easier for Republicans, who have had no rules against accepting corporate money for their convention in Tampa, Fla.

“From an economic development perspective,” said Ken Jones, the president of the Republican convention’s host committee, “this helps the community showcase itself to the world and helps create jobs, and these are laudable goals, whether it’s corporate or individual money.”

Duke Energy has a lot riding on administration policy. The company was awarded $204 million in stimulus money in 2010 to modernize its power grids and a $22 million grant in 2009 to develop wind energy technologies, following similar incentives from the Bush administration. Far more important would be any aggressive move to address concerns about global warming by changing the way emissions are regulated.

Duke split with much of its industry to support the “cap and trade” system that House Democrats unsuccessfully sought to enact early in Mr. Obama’s term. It was part of a coalition of like-minded corporate and environmental groups that helped develop the approach.

Mr. Rogers has said he joined the effort to protect the interests of his company and its customers, arguing that he was compelled to do so given that Duke’s reliance on coal would potentially increase its exposure to the legislation’s costs. But at a meeting in May 2011, a shareholder activist, Thomas Borelli, accused Mr. Rogers of “joining President Obama’s war on fossil fuels” and suggested that Mr. Rogers was angling for a job in the administration by helping the convention, which he denied.

In an interview, Mr. Rogers said he expected to receive no favoritism in return for Duke’s contributions. “I’m doing this because it’s great for Charlotte, and it’s great for North Carolina,” he said.

His cooperation was not enough to persuade a Democratic group, North Carolina Citizens for Progress, to heed Duke’s call to drop an advertisement implying that Mr. McCrory inappropriately did the utility’s bidding while splitting his time as Charlotte’s mayor and a Duke Energy development executive.

Nor has it insulated Mr. Rogers from Democratic criticism that a state investigation into Duke’s recent merger with Progress Energy has distracted from his fund-raising commitments.

Mr. Rogers’s supporters insist that he has kept pace, even as they acknowledge that the fund-raising restrictions pose challenges.

Mr. Rogers said he did not learn about the rules until after Charlotte had been all but announced as the host. “From the beginning of time, conventions have been funded by corporations, by PACs, by lobbyists,” Mr. Rogers said. “And so we went into this thinking we would do that in that traditional way.”

But, he added, “we have taken the challenge, and we are working hard to raise the money under this new set of rules.”

Yet those rules have allowed Duke to contribute in other ways. The company guaranteed a $10 million credit line to the convention committee, money that would have to be paid back but raised questions nonetheless. And it donated several floors of prime uptown office space to the convention.

That sort of “in kind” contribution is allowed under the Democratic guidelines. But advocates for tighter limits on corporate influence question the difference between donations of cash and real estate.

“I don’t see the distinction,” said Melanie Sloan, executive director of the nonpartisan group Citizens for Responsibility and Ethics in Washington. “It’s just a way to try and have your cake and eat it too.”

Prompting further charges of hypocrisy from Republicans, organizers started another fund, New American City, that accepts direct corporate donations, including from Charlotte companies like Bank of Americaand Duke itself. Planners said the fund was primarily for events outside the convention hall, like the opening party for the news media and a Labor Day festival open to the public, giving local companies a role in promoting their city.

Mr. Rogers said he could handle the 360-degree criticism.

“I kind of understand the sport, and you know, no good deed goes unpunished,” Mr. Rogers said. “I guess it just goes with the territory.”

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