Environmental group asks energy regulators to block use of utility customers’ money for lobbying

In a petition Wednesday, the Center for Biological Diversity called on the Federal Energy Regulatory Commission (FERC) to take action against what it says are electric utilities’ use of customer money to bankroll anti-environmental lobbying organizations.

The environmental group argues in its petition that customers unknowingly subsidize lobbying activity with their bill payments, specifically citing the Edison Electric Institute’s (EEI) funding of the Republican Attorneys General Association, as well as the American Gas Association’s history of lobbying state legislators against phasing out fossil fuels, citing laws passed in 2020 in Arizona, Louisiana, Oklahoma and Tennessee.

Under current accounting practices, utilities are able to recover the costs spent on this lobbying directly from customers, the center claims in the FERC petition.

“Millions of dollars are funneled from ratepayers to organizations that pose tremendous threats to the climate and clean energy development,” Howard Crystal, legal director of the center’s Energy Justice program, said in a statement. “People have a fundamental First Amendment right not to be forced to bankroll groups engaged in political activities they oppose.”

The petition also alleges dues-paying members of those trade associations are improperly forced to subsidize such political activity. It cites the 2018 Janus v. AFSCME Supreme Court decision, which found that compelling union dues in the public sector is a First Amendment violation.

“[B]ecause  industry  associations — like  unions — often  engage in political activities, it is no longer appropriate for these dues to be treated as a presumptively recoverable expense” in one account “and then to consider re-allocating portions of those dues related to lobbying and political activities” in another, the petition states.

It points to the difficulty of parsing political and nonpolitical expenses into distinct groups and what the high court called the “substantial judgment call” in identifying a proposed expense as sufficiently apolitical.

“Thus, just as the Supreme Court established a bright-line rule to protect objecting employees from these risks, moving industry association dues to [the unrecoverable funds account], where regulators might similarly determine that they should remain — and be unrecoverable — to protect ratepayers from the risk of subsidizing political activities would appropriately protect ratepayers’ First Amendment rights,” it states.

In a statement to The Hill, Adam Benshoff, EEI’s vice president for regulatory affairs, said “this filing is not legally or factually accurate.”

“The lobbying portion of EEI’s dues already is not recoverable and is calculated using the Internal Revenue Code’s definition of ‘lobbying and political activities’ under section 162(e),” Benshoff said. “This definition broadly captures not only federal lobbying, but also state and grassroots lobbying and political activity. By law, EEI notifies its member companies of the portion of their dues that is used for activity that falls within this definition, and they do not seek any cost recovery of these amounts”

In a statement to The Hill, an American Gas Association (AGA) spokesperson said “AGA is focused on supporting our members’ ability to deliver natural gas safely 24/7/365 and with the highest level of environmental stewardship.”

– Updated: 4:53 p.m.