Last week, Connecticut Governor Ned Lamont signed a law to prohibit utilities owned by state investors from charging customers for lobbying expenses and other efforts to influence political outcomes. The new law marks the third comprehensive effort by a state to stop utilities from using consumers’ monthly bills to fund political efforts, following a similar law passed in Colorado in May and a law that Maine Governor Janet Mills signed in late June.
Across the country, utilities are spending money collected from their customers — called ratepayers — to block climate action and pressure policymakers to let them raise their energy bills. Connecticut’s new law prohibits 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 contractors. lawyers hired by utilities to advocate for rate increases.
Researchers from the Brown Institute for Environment and Society found that Connecticut’s utilities spend more on lobbying than any other sector of government. State utilities have also actively opposed climate policies, including the expansion of local renewable energy programs and rooftop solar. Eversource, the largest state-investor-owned utility, spent over $300,000 in lobbying in the first quarter of 2023 alone.
While it’s not uncommon for corporations to spend money on lobbying efforts, utilities are unique because they operate as monopoly gas and electricity providers. This means that in the absence of laws like those in Connecticut and Maine, customers could be effectively obliged to pay for political efforts they may not agree with.
“Utilities often work against state climate and energy policies,” said Shannon Laun, vice president and Connecticut chapter director of the advocacy group Conservation Law Foundation. “It is entirely appropriate to prevent utilities from recovering these costs from ratepayers when they might in fact be working against ratepayers’ 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 rarely enforced, David Pomerantz of utility watchdog Energy and Policy Institute told Grist in May.
Last year, a report by London-based think tank InfluenceMap found that nearly half of the 25 largest investor-owned utilities in the United States are actively working to slow the transition to clean energy by through lobbying, advertising and political campaign financing.
In a particularly high-profile scandal, utility company FirstEnergy bribed former Ohio House of Representatives Speaker Larry Householder with $60 million to pass a 2019 law that spent billions to bail out nuclear power plants and coal-fired, halved the renewable energy utilities needed to be purchased, 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 was charging 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 problem of utilities using taxpayer funds to lobby, but none are as comprehensive as legislation recently passed in Colorado, Connecticut and in Maine.
Compared to Colorado’s law, which focused primarily on activities influencing legislative outcomes, Connecticut’s new law uses a broader definition of lobbying to include efforts to influence the administrative actions of executive agencies, such as executive boards. state who oversee public services. Connecticut’s law also goes further than Colorado’s by requiring utilities to provide an itemized list of all political expenses each year.
Matt Kasper, deputy director of the Energy and Policy Institute, pointed out that Connecticut’s annual reporting requirement also extends to political expenditures billed to utilities by their parent companies, providing greater “transparency not only at the subsidiaries but also at the level of the holding company”. This is important because parent companies sometimes pool customer funds from various subsidiaries to boost lobbying efforts. In the Ohio corruption scandal, for example, FirstEnergy took money from subsidiaries across five different states to fund his corruption agenda.
The bill passed in Maine also requires a detailed annual report of political spending. As in Connecticut, Maine’s new bill defines lobbying as including efforts directed at both the legislative and executive branches. It also prohibits 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 larger statewide campaign to hold utilities accountable for rising energy costs and climate inaction. Connecticut is the only state outside of Hawai’i to begin implementing a performance-based regulation system, which sets the benefits of public services according to reliability, affordability and emission reduction standards fixed by the state, rather than capital expenditure.
“We have one of the highest electricity costs in the continental United States, and especially for low-income residents of the state, that’s just a very high energy load,” said Laun to Grist. “Legislators have heard from their constituents, ‘What can you do to change things and make public services more accountable?'”