Bill would set new rules against utilities billing customers for political work

Shareholders, not consumers, should pay for any lobbying or other political speech undertaken by their local utility.

That is the simple idea at the heart of SB938, a bill proposed this month by state Sen. Dave Min, D-Irvine.

The pitch comes in the wake of a 2023 investigation by the Sacramento Bee and a state report, released last August, in which the Public Advocates Office said Southern California Gas Co. billed ratepayers tens of millions of dollars to pay for political efforts aimed at changing clean-air regulations in ways that would be profitable for the utility.

It’s legal for companies, including privately held utilities, to lobby for and against policies, laws and regulations. But it’s illegal, under federal law, for a utility to shift the cost of those efforts to customer’s bills.

Yet Min and others argue that over the course of several years Los Angeles-based SoCalGas exploited loopholes in the rules to break at least the spirit of the federal law.

Min’s bill, which was filed this week and is likely to change as lawmakers debate it in coming months, would apply to privately held utilities and establish specific definitions of the types of activities that can’t be billed to ratepayers. The bill also would require public reporting on the financing of a utility’s political speech, and establish a penalty system for any violations.

Min, one of the 21 million people who buy natural gas from SoCalGas, adds that the utilities’ efforts to undo clean-air rules on his behalf was particularly galling.

“I’m a Southern California Gas customer. And when I saw my (gas) bill, and learned about this behavior, I was thinking, ‘This is my money,’” Min said.

“This bill seeks to prohibit an outrageous practice, and I think there’s going to be a lot of popular support for it,” he added. “But it’s a classic political confrontation. There are people on one side and a lot of special interests on the other.”

Officials from SoCalGas have pushed back against some details of the allegations made by the Bee and in the report from the Public Advocates Office, which represents California residents in matters presented to the Public Utilities Commission.

On Friday, utility officials reiterated that they support the state’s clean-energy goals.

“SoCalGas has not had a chance to review the bill in question, but recent media reports about SoCalGas’ use of ratepayer funds have been incorrect,” said Brian Haas, the utility’s manager of media and stakeholder engagement.

“SoCalGas is aligned and working transparently with state, local and federal leaders on a thoughtful path to net-zero emissions.”

But details presented in the 403-page report from the Public Advocates Office, dated Aug. 14, 2023, suggest the utility has engaged in behind-the-scenes efforts to block or slow some of the rules aimed at reaching those goals.

“SoCalGas has been using ratepayer money to engage in ‘organized combat’ advocacy against California’s zero-emission climate policies,” the Public Advocates Office wrote.

“(E)vidence shows that the utility has routinely employed political consultants, law firms, and its own employees – at ratepayer expense – to encourage the continued consumption of natural gas, and to defend itself when caught.”

The report highlighted several instances of political speech and action that Public Advocacy Office officials said was conducted by SoCalGas and later billed to its customers.

For example, the report said ratepayers, not shareholders, financed SoCalGas’ successful effort to convince the Los Angeles Metropolitan Transit Authority to buy gas-powered buses instead of electric buses.

The report also said the utility used ratepayer money to finance the California Restaurant Association’s successful lawsuit against the city of Berkeley’s ban on the use of natural gas lines in new construction – an allegation SoCalGas has denied. Also, the report said that when the state sued SoCalGas for illegally advertising natural gas as “renewable,” it was ratepayers, not shareholders, who paid the legal bill.

The Public Advocates Office is seeking $80 million in rate cuts, a figure that, according to the report, covers only some of the expenses that the office believes were passed on to consumers.

The report noted that SoCalGas pushed back on that figure, saying lobbying expenses were not included in calculations for requested rate hikes. But, when asked, SoCalGas did not offer information to support that contention, prompting the Public Advocates Office to write that the utility’s claim would have to be taken “on faith.”

Lack of information is why Min and others can’t say if other utilities use similar tactics.

“The entire regulatory system is flying blind,” Min said. “We don’t know how common this is because (investor-owned utilities) won’t disclose the information unless they’re forced to.”

Min said he’s reached out to SoCalGas and other utilities for input on the bill.

“We’re not trying to drive rates up; we’re trying to do the opposite,” Min said. “And we believe in having all the stakeholders at the table, even if we disagree with them.”

Source: Orange County Register