California legislators Monday (April 22) rejected by one vote a bill that would have expanded an existing ban on public utility companies charging customers for spending on lobbying and attempting to influence the public. The major target of the legislation was Pacific Gas & Electric, which lobbied heavily against the measure.
The state Senate Committee on Energy, Utilities and Communications for the second time turned thumbs down on SB 638, sponsored by state Sen. David Mim. A committee summary describes the legislation: “This bill expands the types of activities an electrical or gas corporation is prohibited from recovering in rates by expanding the definitions of political activities and advertising, and requires specified reporting of related activities. The bill would also require the California Public Utilities Commission (CPUC) to assess specified civil penalties for any violations of the proposed prohibition and require ¾ of the monies to be deposited in a new Zero-Emission Equity Fund within the State Treasury.”
Current California law generally prohibits billing customers for lobbying and advertising, enforced by the CPUC. Mim and consumer group proponents of his bill argue that the utility companies have found ways around the current prohibitions. As the AP reported, “They accuse them of using money from customers to fund trade groups that lobby legislators and for TV ads disguised as public service announcements, including some recent ads by Pacific Gas & Electric.”
Mim said, “We’ve seen too many examples of the blatant misuse of ratepayer funds across the state. I know that consumers are outraged by this.”
The Mim bill targeted alleged loopholes on utility cost recovery for items such as membership dues to trade and lobbying groups including the national utility lobby Edison Electric Institute and for TV advertising billed as “public service announcements.” This includes some $6 million on ads touting PG&E’s plan to underground powerlines to reduce wildfire risks, which will increase customer rates. The ads featured CEO Patti Poppe, wearing a hard hat, claiming the company is “transforming your hometown utility from the ground up.”
The week before Mondays hearing (April 14), the Sacramento Bee reported, “Pacific Gas & Electric spokesperson Jennifer Robison said in an emailed statement Thursday that PG&E billed customers for the advertisement, called “Undergrounding 10,000 miles of Powerlines for Safety,” in filings to its regulator.”
PG&E spokesperson Lynsey Paulo told the AP, “Our customers have told us they want to know how we are investing to improve safety and reliability. We also use digital and email communications, but some customers do not have internet or email access, so we use methods including television spots to communicate with all of our customers.”
That comment caused scorn from Mark Toney, executive director of the Utility Reform Network. “Only at PG&E would attempts at brand rehabilitation be considered a ‘safety message,’” he said. “This blatant misuse of ratepayer funds is exactly why we need SB 938 and its clear rules and required disclosures for advertising costs.”
California’s investor-owned utilities, particularly PG&E, have severe image problems and face frequent customer outrage. The state has among the highest electric rates in the nation and PG&E has seen two rate increases approved by the CPUC in recent months.
PG&E has been found guilty of criminal charges in recent history, including from repeated wildfires and a natural gas explosion in 2010 the resulted in eight fatalities. The company has filed for bankruptcy reorganization twice this century, most recently in 2019.
The question of regulated public utility spending on lobbying is gathering momentum in other areas. Commenting on the defeat of the California bill, David Pomerantz, executive director of the national utility watchdog group Energy and Policy Institute, commented on Twitter, “These ideas will come back to California soon enough. And they’re spreading around the country in the meantime.”
The institute is tracking these developments aimed at taking politics out of utility bills. In its latest analysis, nine states have proposed legislation, four states have approved policies, and one state – Louisiana – has a regulatory proceeding underway.
–Kennedy Maize