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Author: Medhini Kumar, Evergreen      Published: 1/24/2024    Evergreen Action

There’s the popular saying, “As California goes, so goes the nation.”

From social change to political change to tackling climate change, California has a long history of setting industry-wide standards and charting the course for broader American action.

If it were its own nation, California would be the world’s fifth-largest economy (and growing), sandwiched ahead of India and just behind Germany.  California’s clean energy and pollution reduction commitments really matter—not just to the American economy, but across the globe. And as a state that bears the brunt of some of the worst climate impacts, Californians have good reason to expect and demand climate leadership.

But right now Californians (and most other Americans) are unknowingly bankrolling gas and electric companies’ fights against climate action. 

That’s because utility companies have been quietly sneaking the costs of their nefarious lobbying efforts into their customers’ monthly bills. They then use these funds to gain political influence, speak out against critical clean air, climate, and public health rules, and pay for membership dues to trade associations that spend millions on anti-climate lobbying efforts. And a bipartisan majority of Americans agree that their power bills shouldn’t be funding utility lobbying.

Most Americans Agree Their Power Bills Shouldn’t Fund Utility Lobbying. Do You?

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Some of this lobbying happens directly, but utilities also hide behind trade associations to do their dirty work. The main lobbying group for investor-owned electric utilities is Edison Electric Institute (EEI), and for gas utilities, it’s the American Gas Association (AGA). While many of EEI’s member utilities are publicly bragging about their climate and clean energy pledges, EEI is quietly promoting climate misinformation and fighting common-sense pollution standards to keep dirty gas and coal plants online on behalf of utilities. EEI, alone, collected $60.7 million in revenue from ratepayers in 2023. AGA is just as bad, spending ratepayer funds from utilities like SoCalGas for a host of lobbying, marketing, and advocacy activities—all unbeknownst to customers.

Technically, California has existing regulations that ban utilities from baking the costs of their political lobbying into customers’ energy bills. But loopholes, a lack of transparency, and narrow definitions of “lobbying” have allowed utilities to keep skirting the rules with impunity. Utility companies must be held accountable for their bad behavior, and in California, SoCalGas and Southern California Electric (SCE) are some of the worst actors. 

California Introduces Landmark Utility Accountability Legislation

California has an opportunity to join and build upon a burgeoning national trend of utility accountability to bring these bad actors in line. 

To do so, it must pass a recently introduced bill that would close existing loopholes, strengthen enforcement, and bar utilities from using ratepayer money for political purposes once and for all.  

The bill, if passed, would add clear penalties and prevent utilities from using customer money to:

  • Pay for advertising or public relations campaigns to boost their image
  • Influence decision-makers at the local, state, or federal level, or their staff
  • Pay membership dues, sponsorships, or other contributions to an industry trade association (like EEI or AGA)

Additionally, this bill requires utilities to give the California Public Utilities Commission (CPUC) real-time access to digital records to monitor compliance. Utilities that fail to comply may face penalties of $10,000 to $100,000 per violation. Those funds would flow to a “Zero-Emission Equity Fund” to assist low-income households with the energy transition.

 

What Utility Companies Have to Do With Decarbonizing Our Economy

Power companies don’t just supply electricity. They also decide how and where they get that power from—and how clean it is. Instead of investing in more renewable energy like a majority of voters want, many electric utility companies are deviating from their customers’ interests and clinging onto power generation from polluting, expensive gas- and coal-fired power plants. 

Electric utility companies are not alone in intentionally slowing down economy-wide decarbonization. One-tenth of California’s greenhouse gas pollution comes from home and business emissions, largely from burning gas. A clean economy will require powering buildings with zero-emission appliances running on clean electricity—a direct threat to gas utility profits. In response, gas companies, like SoCalGas, are funding lobbying and public relations campaigns to block and slow down electrification.

Utilities have a choice to make—one that affects all sectors of the economy, their customers, and our climate. It’s time they made the right one.

Utility Companies Are Using Customer Money to Lobby Against Climate Action

Accountability starts with how utilities use ratepayer dollars. And utilities aren’t just charging customers for their energy usage.

From San Diego to San Francisco, utilities in the Golden State are using customer money to foot the bill for their political activities, including lobbying to shape legislation, currying favor with regulators, and shaping public opinion to influence elections.

Take SoCalGas, the country’s largest utility, for example. Since 2019, the gas company has funneled an eye-popping $36 million from customers toward political lobbying and marketing undermining Californian climate policies. These backdoor efforts—on the customer’s dime—have included everything from paying to recruit speakers to speak against electrification during a September 2019 meeting before the California Public Utilities Commission to paying legal fees for a series of lawsuits against California climate policies and building electrification.

In fact, SoCalGas has paid tens of millions of dollars to law firms to lobby regulators and file lawsuits against climate policies that threaten the utility’s profits. When confronted, the utility company denies responsibility, claiming attorney-client privilege. This pattern of repeatedly misusing ratepayer funds for their own political gain while keeping it hidden from customers and misleading the public is dangerous—and currently happening unchecked.

Customers Are Trapped and Paying Increasingly Higher Bills

Even if customers were to learn of these practices, feel righteous outrage, and want out, they likely wouldn’t have anywhere else to go. Because most utilities have monopolies over their service areas, ratepayers have essentially no choice but to pay their region’s power or gas provider. As a result, most Californians are either knowingly or unknowingly being forced to pay into political schemes that likely don’t align with their own values.

To make matters worse, while utilities are spending millions in ratepayer funds on lobbying efforts against climate action, customers are ever more exposed to costs created by the climate crisis as extreme weather events spike power demands, raise costs, and threaten the grid. This harsh reality acutely affects low-income households, who have to allocate a greater percentage of their income to paying their energy bills. Americans are being forced to make hard choices just to keep the lights on with 32.3 percent of the country saying they have cut back or skipped basic expenses like medicine or food at least once in the past year to pay their utility bills. It’s egregious that utilities are turning around to use these revenues to make the crisis worse. This is a major environmental justice issue.

AGA and EEI Are Spending Millions on Climate Denial Campaigns

So, how do trade organizations like EEI and AGA’s shady operations work? 

Utilities pay millions of dollars from ratepayers to be a part of groups like EEI and AGA, and in turn, EEI and AGA each spend millions in lobbying efforts against climate action. In 2023, this amounted to an estimated $60 million in ratepayer revenue for EEI, alone.

Most recently, EEI has been using ratepayer funds to fight our nation’s first-ever climate pollution regulations on power plants—building on a long history of climate denial and delay and other abhorrent, slippery dealings. Among the skeletons in EEI’s closet are its longtime membership to Koch-funded lobbying group ALEC and ties to conservative legacy organizations like the Americans for Tax Reform. And if you held a shred of doubt on where EEI stands on the urgency of climate action and the need for utility accountability, in October 2023, EEI appointed Trump-era Energy Secretary and climate denier Dan Brouillette as the new president and CEO.

The same holds true for AGA and the companies it represents (like SoCalGas), who often have very different priorities than the captive ratepayers, who are unwittingly footing the bill. AGA’s revenue in 2020 was over $30 million, with an overwhelming majority coming from member companies, including gas utilities, who in turn, fund those fees from their customers’ energy bills.

AGA and utilities are invested in keeping the status quo to support their bottom line and providing customers with fossil gas, which is more costly for ratepayers than competing renewable technologies. One way AGA does this is by putting together elaborate influencer and marketing campaigns to improve public perception and use of fossil gas, despite rampant and growing evidence of its negative health impacts. These activities are certainly not in the interest of their ratepayers, and worse, customers are actually paying for it.

In addition to SoCalGas, companies like Southern California Edison (SCE), whose CEO Pedro Pizarro was recently elected as EEI’s board chair, continue to mislead its customers by boasting the company is “leading the transformation of the electric power industry toward a clean energy future,” while simultaneously attempting to block common-sense climate policies.

Right now, utilities and their trade groups are in a wash-rinse-repeat cycle of climate delay:

  1. Brag about their climate and clean energy goals and intentions to transition toward clean energy.
  2. Claim clean power standards are unrealistic—despite the rules being based on the very technologies that industry spent millions of dollars in public money to develop. And then, do the same for a host of other environmental standards.
  3. Quietly pour millions into advocating against standards that would benefit people and the planet—all to shortsightedly service their bottom line, while customers’ bills have never been higher.

It’s time to break the cycle.

Utilities and their trade groups have stoked the climate crisis through decades of backdoor lobbying and are threatening to derail climate action once again. It’s long past time for policymakers to rein in these dirty utilities. 

 

California Must Become the Next State to Protect Customers From Bankrolling Utility Lobbying

A growing number of states are starting to say enough is enough; utilities must be transparent and not use ratepayer funds to serve their own corporate and legal interests. Colorado, Connecticut, and Maine recently passed bills, some of them bipartisan, that block utilities from charging ratepayers for lobbying expenses, including lobbying against climate policies.

EEI took notice.

EEI paid for Facebook ads in Connecticut and Colorado in a failed attempt to squash this legislation. These ads spewed false claims about the proposed bills raising costs for customers, while in fact, the bills will bring both savings and, critically, transparency to customers. In other words, EEI is not only fighting against clean energy—it’s trying to fight against reforms that would hold it accountable to ratepayers.

California law already bans these activities: the use of ratepayer funds to lobby. However, the existing regulation lacks teeth. This new bill offers real promise of what successful enforcement could look like and a roadmap for other states to follow. It requires public utilities to give CPUC real-time access to digital records to monitor compliance (as opposed to quarterly or annual reports). Additionally, it requires harsher penalties and the creation of an equity fund.

By passing this bill, California has the opportunity to bring utilities in line—after years of skirting rules and exerting political influence on the customers’ dime—and at their expense. And by joining the ranks of other states with similarly strong legislation, California can maintain its legacy as a national leader in climate action and establish a roadmap for other states to follow.

Public pressure is growing across the country, and with it, a swell of state-level action and federal momentum barring utilities from spending ratepayer money on political activities and more clearly disclosing their activities in the first place. It would be huge for California—which has the second-largest electric utility company in terms of number of customers—to be the next state to adopt these necessary reforms.

We can’t let utilities and their front groups undermine climate action in California and across the U.S.—and keep letting ratepayers unknowingly foot the bill. A thriving, just, and inclusive clean energy future is coming, whether powerful polluters like it or not—the only question is how long they’re going to be allowed to stand in the way. California must join and grow the movement for utility accountability and pass the bill. And with it, there’s little doubt other states will follow.

We Can’t Let Utilities Undermine Climate Action.