A ‘big mule’ breakup with BCA could be good for Alabama business
For the unfamiliar, BCA is basically Alabama’s state chamber of commerce. It’s an association of businesses who share common policy goals such as improving Alabama’s workforce, maintaining common sense regulation and taxation, and generally promoting economic activity in the state.
Recently, several large members of BCA have withdrawn from the organization over disagreements about direction and management. Leading the pack out the door is Alabama Power.
In a scathing letter to BCA Chairman Perry Hand, Alabama Power CEO Mark Crosswhite ripped BCA as “a liability rather than a benefit” and a “divisive force in the state.” PowerSouth, a south Alabama energy cooperative, followed Alabama Power’s lead but specifically cited BCA President & CEO Billy Canary’s leadership as a chief reason for the company’s departure. A few others like Regions Bank and Blue Cross Blue Shield have followed suit.
The pressure to change BCA’s leadership has grown over the last year. At this point, Canary’s departure is a virtual certainty. The issue is whether it’s an orderly transition or an immediate one. The companies withdrawing seem to prefer the latter approach.
Montgomery Advertiser’s Bryan Lyman reported the departing companies “put forward Seth Hammett, a PowerSouth executive and former Alabama House Speaker, as an interim CEO if the replacement of Canary took too long.”
That’s the same Hammett who also served as a “loaned executive” to disgraced former Gov. Robert Bentley. As a direct result, Gov. Kay Ivey issued an executive order prohibiting administration members from having their salaries paid by outside entities. The mere suggestion of Hammett should be a non-starter for BCA’s leadership. It’s a clear indication that at least some of the departing companies aren’t on the same political page as BCA or most voters in the state.
While the loss of such corporations is significant, BCA’s 2016 tax return showed nearly $6 million in assets–much of it in investments. Assuming they’ve retained that over the last couple of years, BCA could weather this transition without too much panic. In this instance, Alabama’s elite corporations may have overplayed their normally persuasive hand.
Take Alabama Power for example.
According to Energy Information Administration data for March 2018, Alabama’s electricity costs aren’t particularly cheap. They’re higher for residential and commercial customers than every neighboring state. That’s a competitive disadvantage for Alabama’s businesses. Even industrial electricity costs are higher than those states like Tennessee, Georgia, Louisiana, Arkansas and Texas. In short, Alabama has room for better electricity rates.
Imagine a situation where BCA elects a Public Service Commission (PSC) majority dedicated to making those electricity rates the most competitive in the nation. That would certainly benefit BCA’s membership–and potentially Alabama’s residential ratepayers–at the expense of Alabama Power’s bottom line.
That’s a tremendous sales pitch to BCA’s remaining members and a political fundraising tool should BCA decided to prioritize lower energy prices as part of its agenda. As powerful and sophisticated as Alabama Power’s political operation has been over the years, its business fundamentally boils down to keeping at least two members of the PSC in its camp. BCA is one of a handful of organizations in the state capable of challenging that.
In contrast, it’s more difficult for Alabama Power to play political defense because of a law that prevents the state’s regulated utilities from donating to PSC candidates. With traditional allies like Drummond Company and Balch & Bingham tied up with a bribery trial, the power juggernaut is more vulnerable than it has been in quite some time.
Blue Cross Blue Shield takes a similar risk in leaving BCA.
A motivated BCA could push policies facilitating competition in the health insurance marketplace–a direct challenge to Blue Cross Blue Shield’s virtual monopoly. With a strong push from BCA, Alabama’s Republican majorities would be hard pressed to side with higher insurance premiums over better rates for their constituents. Like electricity costs, health insurance is a cost that every Alabama employer wouldn’t mind reducing…significantly.
In short, it comes down to the clout of a few of Alabama’s “big mules” against the rest of BCA’s membership. If a handful of the state’s most powerful corporations win the battle for control of BCA or demolish it outright, it’s business as usual in Alabama. If those companies take their shot, BCA survives, and doesn’t beg for them to return into the fold, Alabama’s political landscape will quickly and radically transform. BCA’s remaining members might find that breaking up with the “big mules” is simply good business.
