California Utilities Use Ratepayer Money to Stop Climate Solutions SacBee expose reveals SoCalGas illegally spent at least $36 million to fight state climate policies

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An explosive new investigative report by Joe Rubin and Ari Plachta in the Sacramento Bee revealed that utility companies have regularly used ratepayer funds to block climate solutions like electrification. If true, this would be illegal and constitute fraud.

SoCalGas claims that its lobbying activities are paid out of profits, but in a brief by the California Public Advocate’s Office, the agency accuses SoCalGas and San Diego Gas and Electric Company of spending millions of dollars in ratepayer funds on lobbying against climate change policies and suing the state to prevent pro-climate rules from going into effect.

Utilities are allowed to engage in political activities, but they are required to pay for them out of their profits. Using ratepayer funds for any kind of political activity is illegal.

The Bee quotes Mary Flannelly, a spokesperson for the state’s Public Advocate Office as saying, “SoCalGas has been using ratepayer dollars to engage in advocacy efforts against California’s climate policies… This inappropriate use of ratepayer funds only serves to benefit SoCalGas at a time when ratepayers are dealing with increasingly high customer bills.” 

Sac Bee investigative reporters reviewing publicly available records found that “SoCalGas booked at least $36 million to ratepayers for political lobbying to undermine California policies aimed at addressing the climate crisis since 2019.”

At a time when the state is falling behind on its climate change goals, utilities have worked to stop some of the most important solutions to climate change. One of the particularly egregious examples in the Bee article has to do with the California Energy Commission efforts to phase out natural gas plants – one of the largest state contributors to greenhouse gas emissions outside of transportation.

In 2020 SoCalGas sued the CEC over their plans to phase out natural gas and paid attorneys with ratepayer funds.

Mike Vespa, an attorney with EarthJustice, was quoted “What is so messed up here,” he said, “is not only are ratepayers paying for this litigation, but then the agencies, which are taxpayer funded, have to squander resources to defend against baseless harassment lawsuits.”

The article also details multiple times where journalists or regulators found that the utility had used ratepayer funds improperly, only for the companies to call it an accounting error when called out on the misappropriation. The utilities have used other tactics to hide their activities from the Public Advocate and other investigators, such as claiming attorney client privilege, or concealing their contracts with PR firms with first amendment claims.

Mike Campbell, program manager for the Advocate’s Office, told The Bee he is concerned that these types of tactics are hiding possible “financial malfeasance.”

The gas giants deny any claims of wrongdoing other than those that they have already been fined for, like a 2019 video campaign that called natural gas a type of renewable energy.

They were fined $175,000 and spent another $200,000 on lawyer fees to fight that lawsuit.

Using ratepayer funds to stop climate change or effect political change is not unique to California utilities. Both gas and electric corporations rely on business as usual to bring profit to their shareholders. Without a regulator or the legislature taking strong action, they are likely to continue using ratepayer funds to block solutions to climate change.

 

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Tim Ryan

Tim Ryan is the Managing Editor of the Sonoma Independent and the COO of the Sonoma Independent's parent organization, Progressive Source Communications. He writes stories on climate, elections, housing, and local news. Tim joined Progressive Source Communications in early 2019 as an outreach coordinator working on the Candidates Video Debate project. He has worked on many of Progressive Source’s projects, including managing marketing for the Inform Your Vote project, which covered the New York City Mayoral election of 2021. Currently, in addition to day to day operations, he often serves as an account or project manager for Progressive Source projects, such as the recent Portola Wood Stove Changeout Campaign and the California Air Resources Board, Fundamentals of Air Quality Series. In 2017, he graduated with honors from Cal Poly Humboldt, earning a bachelor’s degree in sociocultural anthropology with a minor in psychology. As an undergraduate, he received institutional approval and grant funding to conduct ethnographic research on the 2016 presidential election, later presenting this research at symposia. He was a founding member of the Humboldt County Ethnographic Archive, which is now permanently housed on campus. Before joining Progressive Source, Tim worked in social services for the county Department of Health and Human Services in Humboldt County, CA. He was also an assistant field manager for the local environmental political action committee, Sonoma County Conservation Action. He is passionate about social equity, labor, and environmental issues.

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