Thousands of trade associations consider Washington, D.C. home, more than any other city in the country. These associations provide networking opportunities and collaboration among like-minded organizations, lobby the government for favorable outcomes for their members, and advocate and educate the public on issues that matter to their members. Membership in a trade associations comes with a cost that typically varies based on the size or revenue of the company and the level and scope of involvement. And for the most prominent around Capitol Hill, membership can come with a hefty price tag.
How do these companies pay for their memberships?
Most utilities charge their customers a fee in order to pay dues to their favored trade associations, such as the American Gas Association (AGA) and Edison Electric Institute (EEI). To be sure, it also includes clean energy energy groups such as the Solar Energy Industry Association, which has gone on the record opposing the practice of charging customers in order to pay the utilities’ dues to their organization.
The problem is that the policies utilities are often asking their trade associations to advocate for favor the utilities – not consumers. Large integrated utilities are using ratepayers’ own money to lobby for policies and regulations that protect an outdated and costly monopoly system.
The Federal Energy Regulatory Commission (FERC) last month issued a Notice of Inquiry (NOI) to examine the rate recovery, reporting and accounting treatment of industry association dues and political related expenses. The FERC move was in response to a petition from the Center for Biological Diversity over whether ratepayers of investor-owned utilities should be forced to subsidize the costs of trade associations that are deemed ‘anti environment.’ Other organizations like the Citizens’ Utility Board, The Utility Reform Network, Nevada Bureau of Consumer Protection, and Maryland Office of People’s Counsel have come out in support of the petition as well.
While there are differing opinions on how ‘anti environment’ is defined, the underlying concern is valid. Simply put, customers should not be paying for trade association dues and the political speak they engender, just as they shouldn’t pay for anything else that has no direct benefit to the quality and reliability of the service they receive from their utilities.
“FERC sets the accounting standards for the utility industry, and those standards have long recognized that ratepayers should not be forced to pay for their utility’s political activities as a general principle. The Commission’s standards, however, have not extended that principle to utility’s trade associations, despite the fact that those associations generally serve the political agendas of their member companies.” the Energy and Policy Institute wrote about the issue last month.
The Energy and Policy Institute released a report in 2017 on how utilities use ratepayer funds to pay for political activities through their trade associations.
The argument from the trade associations is that these charges aren’t technically related to political lobbying. But even if that’s true – and it’s a highly dubious claim – it’s irrelevant. Regardless of how the costs are classified, they still don’t provide any direct benefit to customers. The AGA even unintentionally made the CBD’s point with its quote saying, “While lobbying is a form of advocacy, not all advocacy is lobbying.”
If anything, some of these funds are used to gain political influence, as well as public relations campaigns that often mislead customers to support efforts that are against their interests, like eliminating net-metering policies for solar, eliminating energy efficiency programs which incentivize everything from LED lighting to EnergyStar-rated appliances, preventing state renewable portfolio standards from being passed, and subsidizing expensive coal and nuclear plants, none of which are in the customers’ own interests.
As it is, most investor-owned utilities in monopoly regions are guaranteed a rate of return ranging from 9.15 percent for the United Illuminating Company (CT) to 13.75 percent for Alabama Power, according to the Advanced Energy Economy, which makes charging customers for these dues all the more unjustifiable. Alabama Power is also accused of spending millions on front groups to monitor its opponents and regulators, according to an analysis conducted by Energy and Policy Institute researchers.
If monopoly utilities want to lobby to keep their stranglehold on consumers, they should do so out of their executive bonuses – after all, they’re the only ones benefiting from monopolistic practices.