Landmark Rate Case will Save Southern Californians from Paying Tens of Millions for Dead-end Hydrogen Projects and SoCalGas’ Climate Obstruction Efforts

Yesterday, the California Public Utilities Commission (PUC) voted to deny the use of customer funds for lobbying expenses, costly memberships in trade associations like the American Gas Association, gas system expansion projects and a litany of proposed hydrogen investments in the rate case for SoCalGas and San Diego Gas & Electric. The decision also sets a new standard for greater transparency and utility accountability. Because of this decision, SoCalGas and SDG&E customers will see far lower bill increases than the companies proposed. Earthjustice represented the California Environmental Justice Alliance in the rate case.

“There’s a lot to like in the CPUC’s decision,” said Matt Vespa, senior attorney on Earthjustice’s Right to Zero Campaign. “Southern Californians shouldn’t have to pay for SoCalGas’s reckless ventures to expand its polluting fossil fuels business, like building homes that burn hydrogen. Before this decision, SoCalGas’s political expenditures were a black box, and customers were unknowingly on the hook for paying for all sorts of schemes, including lobbying regulators against California’s clean air and climate standards. Now, the utility will be required to be far more transparent, which is great news for customers facing spiraling gas bills.”

Today’s decision from the PUC agreed with CEJA in cutting millions from the utilities’ original plans to spend customer money against customers’ interests, including:

• $2.4 million in dues for trade associations like the American Gas Association and Hydrogen Council for both SoCalGas and SDG&E
• $44.9 million for SoCalGas’s hydrogen fueling and hydrogen home projects
• $2.4 million for SoCalGas’s legal fees for efforts such as suing state agencies, challenging state decarbonization policies, fighting the Attorney General’s enforcement of environmental laws, and influencing agency decision-making
• $18 million for projects to expand gas system capacity
• $5.3 million for SoCalGas’s business development activities, such as hiring consultants to advise on business opportunities and lobbying involving hydrogen and carbon dioxide pipelines

As demand for fossil fuels continues to fall, SoCalGas has spent millions of customer dollars on a web of self-serving advocacy to keep Californians hooked on fossil fuels, passing on these expenses to its 21 million customers. After determining that SoCalGas tried to charge customers for political activities and legal fees that don’t benefit customers, the PUC will require the utilities’ shareholders to pay for these activities.

“It’s good to finally see some accountability after SoCalGas has spent years recklessly spending customer money fighting climate and clean air policies, while customers see spiraling costs,” said Mari Rose Taruc, energy justice director at the California Environmental Justice Alliance. “This decision will also prevent the utility from using customer money as a piggy bank for unproven, dangerous, and costly projects like hydrogen and natural gas refueling stations, which we know are not the fix for cutting pollution in communities across Southern California.”

The decision, which includes new reporting requirements to ensure compliance, will require SoCalGas shareholders to pay for employee and consultant work that opposes electrification at agencies like the South Coast Air Quality Management District. No public utility commission in the country has enacted this level of transparency, and this decision sets the standard for utility accountability across the nation, demonstrating real leadership from the PUC.

“This decision from the Public Utilities Commission is a great first step,” concluded Vespa. “We now have effective new transparency mechanisms and safeguards to protect customers from being charged for SoCalGas’ climate obstruction. Unfortunately, we still don’t have penalties in place and we really need them as a deterrent for bad actors like SoCalGas.”