States cracking down on utility companies billing customers for lobbying, political efforts

Environmentalists and their Democratic allies in state government are pushing regulations to prevent public utility companies from bankrolling their lobbying and political influence efforts with proceeds from consumers’ energy bills.

Federal and state laws prohibit utility companies from directly using money from ratepayers for political and lobbying expenses. Loopholes can allow customer financing for trade association lobbyists, public relations firms, lawyers and consultants who advocate on utility companies’ behalf.

In some cases, ratepayers are funding — likely unknowingly — efforts to raise their energy costs or to oppose initiatives for lower greenhouse gas emissions.

Colorado’s Democratic-run legislature recently passed a bill barring investor-owned public utility companies from charging customers for lobbying, advertising or other political efforts such as candidate contributions. Gov. Jared Polis, a Democrat, is expected to sign the measure into law.

Louisiana Public Service Commissioner Davante Lewis, one of five elected officials on the independent regulatory agency that oversees the state’s public utilities, wants to follow suit. He is working on a proposal similar to Colorado’s.

“Something has to be done here because it’s not fair to the people of Louisiana, who are suffering from some of the highest energy costs in the nation, are suffering from one of the most unreliable utility grids in the nation and are suffering from pollution,” Mr. Lewis, who represents the Baton Rouge and New Orleans areas, told The Washington Times. “They are using our hard-earned money … and spending it against our own interests and buying off elections.”

The proposals would put the onus on shareholders to foot the bills for advertising, lobbying and other political efforts. The rules apply to public utility companies, which means investor-owned green energy companies would also be impacted.

The electric utility industry spent more than $124 million last year on lobbying and used more than 800 lobbyists, according to OpenSecrets, a nonprofit organization based in Washington that collects data on campaign finance and lobbying.

Other Democratic-led states have enacted similar measures regulating the funding of utilities’ lobbying activities. New York prohibits public energy companies from passing the fees for trade association memberships to consumers. In Minnesota, public utilities may not charge ratepayers for advertising to boost their public image or sway public opinion.

Public utilities must receive approval from state regulators such as Mr. Lewis for rate hikes or baking expenditures into consumer bills. Although in conservative Louisiana, each commission member is elected. That means the agency does not need approval from the Republican-controlled Legislature.

The Louisiana Public Service Commission comprises two Democrats, including Mr. Lewis, and three Republicans.

“When it comes to ratepayers, I think it will be a fruitful discussion,” Mr. Lewis said.

The federal government’s independent energy commission overseeing the U.S. power sector — the Federal Energy Regulatory Commission, or FERC — sought public comments last year as it weighed whether to ban customer charges for trade association dues. Congressional Democrats have repeatedly urged the commission to prevent such fees from being passed to ratepayers, but the agency has declined.

Frustrated by utilities resisting the aggressive push to transition to clean energy alternatives, environmentalists tout these anti-lobbying regulations as wins for fighting climate change and lowering energy bills.

“Utilities are ground zero in implementing the clean energy transition,” said Jamie Henn, director of the climate activist group Fossil Free Media. “This is a really important point of leverage that could potentially change how utilities operate. As ratepayers, we collectively hold the purse strings when it comes to these propaganda efforts, so that provides an avenue for us to help shut them down.”

Meanwhile, energy companies reject the allegation that they engage in nefarious lobbying with money collected from customers’ bills.

In testimony to lawmakers opposing Colorado’s anti-lobbying bill, public utilities rejected lawmakers’ accusations that the companies tailor their definition of lobbying to avoid disclosing expenses.

“With respect to lobbying, anything that we’re doing that is a participation in the process of bill making, what the work that you guys do up here, we would consider that lobbying,” said an executive for electric and natural gas provider Black Hills Energy. “And again, our customers do not pay for that when we go in for rate cases. Those dollars are pulled out of any revenue requirement or anything that we put forth.”

Lobbying against the Colorado bill were Black Hills Energy, other regional utility companies and some of the nation’s largest fossil fuel and utility industry lobbyists, including the Edison Electric Institute and the American Petroleum Institute.

Major climate groups such as the Sierra Club and the Natural Resources Defense Council lobbied to support it.

The Edison Electric Institute insists they are transparent with their political spending and lobbying efforts and follow all applicable laws.

In its annual lobbying report released this year, the group said it reports its lobbying expenses to Congress as federal law requires. Records show the Edison Electric Institute spent nearly $10.5 million last year on lobbying.

The Energy and Policy Institute, a utility watchdog, wants legislators to enact laws that more clearly define political activity and lobbying so there is no ambiguity as to whether ratepayers are footing the bill.

“A combination of vague and outdated rules ridden with loopholes, a lack of visibility into utility political influence activities for regulators and the public, and an abdication of enforcement by regulators has meant that utilities have had free [rein] to use their customers’ money toward their political operations,” EPI Executive Director David Pomerantz wrote in a report on the subject.