Hot trend: States banning utilities from charging you for their lobbying

This story was first published by Grist.

In late June, Connecticut Governor Ned Lamont signed a law prohibiting the state’s investor-owned utilities from charging customers for lobbying expenses and other efforts to sway political outcomes. The new law marks the third comprehensive effort by a state to prevent utilities from using funds from consumers’ monthly bills to bankroll political efforts, following a similar law passed in Colorado in May and a law that Maine Governor Janet Mills signed in June.

Across the country, utilities spend money collected from their customers — known in industry parlance as ​“ratepayers” — to block climate action and pressure policymakers to let them hike up energy bills. Connecticut’s new law bans utilities from charging customers for trade association dues, donations to political advocacy nonprofits that seek to influence elections, public relations expenses, and fees for consultants and lawyers hired by utilities to argue for rate increases.

Researchers at the Institute at Brown for Environment and Society found that utilities in Connecticut spend more on lobbying than any other sector in the state. State utilities have also actively opposed climate policies including expanding local renewable energy programs and rooftop solar. Eversource, the state’s largest investor-owned utility, spent over $300,000 in lobbying during the first quarter of 2023 alone.

While it’s not uncommon for companies to spend money on lobbying efforts, utilities are unique because they operate as monopoly providers of gas and electricity. That means, in the absence of laws like Connecticut’s and Maine’s, customers could effectively be forced to pay for political persuasion campaigns they may not agree with.

“The utilities are often working against the state’s climate and energy policies,” said Shannon Laun, vice president and director of the advocacy group Conservation Law Foundation’s Connecticut chapter. ​“It’s entirely appropriate to prevent the utilities from recovering those costs from ratepayers when they might actually be working against ratepayer interests.”

Federal and state regulations already prohibit utilities from collecting money from customers to fund political operations. But existing rules are ​“riddled with loopholes” and seldom enforced, David Pomerantz of the utility watchdog Energy and Policy Institute told Grist in May.

Utilities working against the energy transition

Last year, a report by the London-based think tank InfluenceMap found that close to half of the 25 largest investor-owned utilities in the U.S. are actively working to slow the transition to clean energy through lobbying, advertising and funding political campaigns.

In one particularly high-profile scandal, the utility company FirstEnergy bribed former Ohio House of Representatives Speaker Larry Householder with $60 million to pass a 2019 law that allocated over $1 billion to bail out nuclear power plants, halved the renewable power utilities were required to buy and eliminated energy-efficiency requirements. A subsequent audit by the Federal Energy Regulatory Commission, an agency that oversees the transmission and sale of electricity and gas, found that FirstEnergy charged its ratepayers tens of millions for funds used to bribe officials.

A few other states, including New York and Minnesota, have passed laws to address the issue of utilities using ratepayer funds for lobbying, but none are as comprehensive as the legislation passed recently in Colorado, Connecticut and Maine.

Compared to Colorado’s law, which primarily focused on activities influencing legislative outcomes, the new Connecticut law uses a broader definition of lobbying to include efforts to influence administrative actions by executive agencies, like the state commissions that oversee utilities. Connecticut’s law also goes one step further than Colorado’s by asking utilities to provide an itemized list of all political expenditures each year.

Matt Kasper, deputy director at Energy and Policy Institute, emphasized that Connecticut’s annual reporting requirement also extends to political expenses charged to utilities by their parent companies, providing greater ​“transparency not just at the subsidiary level but also at the holding company level.” That’s important because parent companies sometimes pool together customer funds from various subsidiary utilities to boost lobbying efforts. In the Ohio corruption scandal, for example, FirstEnergy pulled money from subsidiaries across five different states to fund its bribery scheme.

The bill passed in Maine also requires an annual itemized report for political expenditures. Like Connecticut’s, Maine’s law defines lobbying as including efforts directed at both the legislative and executive branches. It also bans utilities from recovering the costs of trade association dues, donations to political groups and nonprofits, and public relations campaigns from customers.

Connecticut’s new law is part of a broader statewide push to hold utilities accountable for rising energy costs and climate inaction. Connecticut is the only state besides Hawaii to have begun implementing a performance-based regulation system, which sets utilities’ profits according to reliability, affordability and emissions-reduction standards set by the state rather than capital expenditures.

“We have among the highest electricity costs in the continental U.S., and especially for lower-income residents of the state, that’s just a really high energy burden,” Laun told Grist. ​“Legislators have been hearing from their constituents, ​‘What can you guys do to change things and to increase accountability for the utilities?’”