New legislation can stop utilities like SoCalGas from abusing customer money to fight climate action.
When you think about what you’re paying for in your electric and gas utility bill, you probably think of the energy powering your lights, furnace, and stove. But you may also be paying for your utility to lobby against popular clean air and climate standards. After years of investigative work pulling documents from utilities, we now know that this is true for many Californians – and it’s not chump change, either. From erecting front groups to lobby against state climate policies to paying a business association to recruit speakers opposing electrification at public hearings, utilities like SoCalGas have charged customers tens of millions of dollars in their campaign to keep Californians dependent on fossil fuels.
Thankfully, new legislation has been introduced in California that can tackle this problem and ensure Californians aren’t footing the bill for their utility’s political and promotional activities. Our organizations are proud to be co-sponsoring SB 938, the Utility Accountability Act, authored by Senator Dave Min. The legislation protects Californians by clearly defining the political and advertising activities for which utility shareholders – and not customers – must foot the bill, creating strong transparency and penalty provisions to ensure compliance, and no longer allowing utilities to charge customers for expensive memberships to trade groups that lobby against climate action like the American Gas Association and Edison Electric Institute.
Closing the Door on A Shameful Utility Practice in California
This bill builds on existing federal regulations requiring utility shareholders to pay for efforts to influence public opinion or the decisions of public officials. Under the Utility Accountability Act, utilities can continue to charge customers for participating in proposed rules concerning the safe operation of their systems or when their engagement has been specifically requested. However, the bill ends the shameful practice where utilities like SoCalGas charge customers for the utility’s unsolicited participation in agency actions such as proposed air quality and vehicle standards. These are the settings where we see utilities like SoCalGas push to weaken new standards with giveaways like carve-outs for methane-burning vehicles that pollute our air and climate.
By requiring utility shareholders to pay for these efforts, the bill protects the environment – as utilities have shown markedly less interest in interfering with climate policy when they have to spend their own money to do so.
For one striking example, after it was uncovered that SoCalGas used customer funds earmarked to advocate for stronger efficiency standards and building codes to instead oppose stronger regulations, the state prohibited SoCalGas from using customer money for any future advocacy in this area. Since then, SoCalGas has largely stopped doing so even though it remains free to use shareholder money to push its agenda.
Californians need more transparency around expensive advertising campaigns from their utilities. The bill codifies existing policy that utility shareholders pay for public messages that tend to enhance a utility’s public image, and adds a new requirement that every utility public message or advertisement will be required to clearly disclose whether shareholders or ratepayers funded the message.
To understand why this is necessary, let’s look to PG&E: PG&E’s rates are skyrocketing while it is blanketing Northern California with television ads promoting its image as a company that takes safety seriously. Under this new legislation, the California Public Utilities Commission could easily assess whether the utility is funding messaging consistent with the new law, and Northern Californians could rest assured they weren’t unknowingly footing the bill for these types of ads.
Making Sure Utilities Get It Right Rather than Try to Get Away With It
While utilities have long been prohibited from charging customers for their political activity, they have done so with impunity by claiming inadvertent error when caught. With no strong consequences in place, utilities are incentivized to see what they can get away with. For example, it took eight months and an order from state regulators before SoCalGas was forced to admit that it wrongly charged customers to pay the law firm used by the California Restaurant Association in its challenge to the City of Berkeley’s building electrification ordinance to research legal issues at the heart of that lawsuit.
By imposing mandatory penalties that run from the day the cost is improperly assigned to customers to the day it is corrected, the bill motivates utilities to get it right and ensure customers are not inappropriately charged. These penalties shouldn’t represent a threat to their shareholder’s bottom lines: to the extent that utilities remain in compliance with existing limitations, the new potential for penalty should be of little concern.
The bill’s transparency provisions will also help with deterrence and efficient enforcement. The bill requires that the utility submit annual reports identifying employees and associated salaries for any employee working in a utility line of business related to political influence and advertising. These reporting and disclosure requirements will streamline review of political influence and advertising to ensure ratepayers have not been inappropriately charged.
Utilities also charge Californians millions each year for memberships to trade associations such as the American Gas Association for activities that include challenges to appliance efficiency standards and pushing state laws to prohibit cites from requiring all-electric new construction. This bill follows states like New York by putting that requirement into law and expanding it to limit recovery of dues for a trade association group if any portion of the dues would fund political influence or advertising and assures that Californians will not be indirectly funding the same organizations that are otherwise advocating against California’s climate goals.
For years, utilities in California have gotten away with slipping the costs for their political influence machines into Californians’ energy bills. It’s time to pass common sense measures to end this shameful practice, and protect Californians’ pocketbooks and our climate with a forward-looking new law.
A senior attorney, Matt is based in San Francisco. His work focuses on accelerating deployment of clean energy in California and avoiding new investments in fossil fuel infrastructure. Matt’s areas of expertise include utility procurement, local reliability need, rooftop solar tariffs, rate design, energy storage, renewable integration, and decarbonization trajectories.
A staff attorney at TURN (The Utility Reform Network), Katy Morsony represents consumers in key energy cases at the California Public Utilities Commission.
Earthjustice’s Clean Energy Program uses the power of the law and the strength of partnership to accelerate the transition to 100% clean energy.