SoCalGas, the nation’s largest natural gas distribution utility, has suffered two public, self-inflicted black eyes as the Los Angeles company gears up for what promises to be a controversial price hike next year. The company has a “general rate case” pending at the California Public Utilities Commission, seeking an additional $5 billion in revenue over four years, beginning Jan. 1, 2024.
On Aug. 14, the Sempra Energy subsidiary with some 21 million California customers reached a settlement with California Attorney General Rob Bonta over greenwashing its natural gas supplies. His office issued a press release saying the settlement involved “unqualified environmental marketing claims the company made in 2019 that natural gas is ‘renewable.’ Such claims are misleading. The vast majority of natural gas — including a vast majority of the gas distributed by SoCalGas — is not renewable, but rather is derived from fossil fuels. An investigation by the California Attorney General’s office revealed that SoCalGas made the misleading statements in a wide range of mediums, such as print, electronic media, informative displays, backdrops, and promotional swag.”
Only about 5% of the company’s gas comes from renewable biogas from landfills and dairy operations.
The settlement included the gas utility paying a $175,000 penalty “50% ($87,500) of which will be directed to the California Environmental Protection Agency’s Environmental Justice Small Grants Program to fund a Supplemental Environmental Project (SEP) focused on environmental justice.” The company must also publish a “corrective statement on its website….”
Bonta said, “SoCalGas is a large, sophisticated entity. While we appreciate its cooperation in our investigation, SoCalGas should have known better than to broadcast unqualified claims suggesting that all natural gas is ‘renewable.’ Truth in marketing matters, and it’s required under state law. Today’s settlement should send a clear message: The California Department of Justice is committed to holding accountable corporations that mislead or deceive consumers about the environmental attributes of a product.”
Just days later (Aug. 17), the Sacramento Bee reported, “After reviewing public documents, The Bee has determined that SoCalGas booked at least $36 million to ratepayers for political lobbying to undermine California policies aimed at addressing the climate crisis since 2019.” The Bee based its reporting in part on an Aug. 14 filing by the California Public Utility Commission’s Public Advocates Office as part of the rate case for a 2024 rate hike.
The 400-page filing finds that “SoCalGas has been using ratepayer money to engage in ‘organized combat’ organized advocacy against California’s zero-emission climate policies. That evidence 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.”
“In addition to proactively engaging in these campaigns at ratepayer expense, the utility has also charged ratepayers for the costs of defending itself when it is caught breaking the law,” CPUC Public Advocates Office.
The filing continues, “In addition to proactively engaging in these campaigns at ratepayer expense, the utility has also charged ratepayers for the costs of defending itself when it is caught breaking the law. For example, when the California Attorney General’s office learned that SoCalGas was advertising that natural gas was ‘renewable’ in violation of green marketing rules, the utility booked its legal defense costs to ratepayers.”
The Public Advocates added, “The utility has also booked legal costs to ratepayers when only shareholders have benefited from the litigation. For example, when the utility went to court against the Commission for the right to withhold shareholder information from Cal Advocates, the costs of that litigation were booked to ratepayers, even though the beneficiaries of that litigation were its shareholders.” The filing suggests these improper cost allocations could be upwards of $80 million.
The Public Advocates Office suggests cutting $1 billion from the utility’s rate request.
SoCal Gas traces its origins to the 1867 formation of Los Angeles Gas Co., which used factory gas made from asphalt and oil to supply 43 gas lamps along the city’s main street. In 1879, Thomas Edison got into electric street lighting, causing the gas company to look to other markets, including heating and cooking. In 1890, San Francisco-based Pacific Lighting bought several gas manufacturing and distribution companies including Los Angeles Gas, and Southern California Gas Co. was born.
In 1909, the discovery of the enormous Buena Vista gas field was discovered, and the gas business was transformed. “Natural” gas had twice the heating value of manufactured gas, so the company rapidly converted its system to the fossil fuel and began building pipelines to move it to market. By 1941, the company began storing gas underground, using depleted oil and gas fields.
In October 2015, gas began leaking from one of those giant storage fields, Aliso Canyon, located above the city of Burbank. Some 1,700 homes and two schools had to be evacuated and temporarily relocated from Porter Ranch, about 20 miles from downtown Los Angeles, as the utility worked to plug the leak. An official of the Environmental Defense Fund told The Washinton Post, “It is one of the biggest leaks we’ve ever seen reported.”
–Kennedy Maize
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