Should You Pay Trade Association Dues For Utility Companies?

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Right now, utility companies are allowed to charge customers for trade association dues that prop up the energy status quo. It’s a little known element of your utility bill, and a 5-member commission is weighing whether it should continue to be allowed. You see, under the current accounting system, utilities are allowed to pass on these costs to customers, even if the trade associations are fighting climate policies and if the customers oppose these activities.

Advocacy groups argue that trade association dues should be recovered in rates that would increase transparency around the issue.

The Federal Energy Regulatory Commission (FERC) is involved in an inquiry into whether it should change its accounting rules to prevent electric and gas utilities from recovering expenses related to political and lobbying contributions from their customers.

The Center for Biological Diversity, an environmental group, submitted a petition in March urging the commission to reconsider this system. The petition argued that customers have a First Amendment right not to bankroll anti-environment activities that they oppose.

“It’s time to stop forcing people to support anti-environment trade groups that stand in the way of the urgently needed transition to clean energy,” said Howard Crystal, legal director of the Center for Biological Diversity’s Energy Justice program, told the Washington Post. “Often those groups are working directly against the customers’ own interests, as well as the future well-being of their children.”

FERC issued a notice of inquiry on the matter in December, asking the public and trade groups to weigh in. Cited in the petition were several trade organizations — many of whom profess to be working toward a clean energy future while, behind the scenes, are seeking to delay zero emissions through stalling techniques.

In its petition, the Center for Biological Diversity named Edison Electric Institute and the American Gas Association as two examples of trade groups that have fought climate policies and stuck ratepayers with the bill.

  • The Edison Electric Institute, the leading industry association for utility companies, sought to delay implementation of the Clean Power Plan, according to the Washington Post.  In 2015, the institute gave $7.7 million to the Utility Air Regulatory Group, a now-defunct group that argued against the Clean Power Plan before a federal appeals court.
  • The American Gas Association has lobbied state lawmakers on a national scale to prohibit local governments from banning natural gas in new buildings. Arizona, Louisiana, Oklahoma and Tennessee passed laws last year protecting gas in new construction, and similar laws are being considered in 12 other states.

Other energy trade group organizations cited in the Center for Biological Diversity petition include the Nuclear Energy Institute, the American Public Power Association, and the National Rural Electric Cooperative Association.

An initial round of public comments was due last month; responses are due March 23, 2022.

The notice seeks comments on 22 questions focused in 3 areas:

  • Delineation of recoverable and non-recoverable industry association dues by member utilities for rate purposes
  • Increased transparency in industry association expenses and segments of industry association dues charged to utilities as well as utilities’ and industry associations’ expenses from civic, political and related activities
  • A framework for guidance should the Commission determine action is necessary to further define the recoverability of industry association dues charged to utilities and/or utilities’ expenses from civic, political and related activities

A coalition of Democratic senators sent a letter to FERC Chairman Richard Glick last month urging him to change course. “For too long, utilities have financed the political activities of trade associations using funds from captive ratepayers,” they wrote. “These trade associations then lobby for policies that frequently run counter to ratepayers’ interests.” Signing the letter were Senators Sheldon Whitehouse (RI), Edward J. Markey (MA), Elizabeth Warren (MA), Jeff Merkley (OR), and Dianne Feinstein (CA), as well as Bernie Sanders (VT), an independent who caucuses with Democrats.

The Gamble on Natural Gas

Cities and towns across the country are rewriting local building codes so that new homes and offices would be blocked from using natural gas, a fossil fuel that when burned emits carbon dioxide into the atmosphere. New laws would force builders to install heat pumps instead of gas furnaces and electric kitchen stoves instead of gas burners.

In reaction, the American Gas Association and its members are campaigning in statehouses across the country to prohibit the new local ordinances. Four states last year adopted such laws, and this year similar legislation has been introduced in 12 more.

The Hill joined the tirade, calling out FERC earlier this year for what is saw as “favoritism for renewables over natural gas, ignoring cost and reliability concerns.”

Municipalities seem not to be listening.

On February 1, the Seattle City Council voted unanimously to restrict natural gas use in new commercial buildings and multifamily homes higher than three stories. Puget Sound Energy, on the other hand, which distributes both gas and electricity to Washington customers, says it is “fuel neutral” and set an “aspirational goal” of being carbon neutral for its gas sales by 2045.

From New York City’s recent ban on gas in new construction, to Californian cities’ steady march to “cut the pipe,” to the backlash and ban on gas bans in 20 states, methane has become an important battleground where the US transition from fossil fuels is taking place.

In Colorado, Denver’s Office of Climate Action, Sustainability and Resiliency endorsed a plan that calls for newly built homes and buildings to be mostly electrified by 2027. Say goodbye, “natural” gas.

The Push for Clean Energy Legislation

By investing in US clean energy, utilities could accelerate the transition to a zero emissions future. This is especially important at a time in which energy access is being interrupted by foreign supply chain disruptions and the war in Ukraine. Trade association dues could more appropriately be directed to organizations that offer pathways to clean energy alternatives to fossil fuels, like those that promote renewable energy in general, solar energy, wind energy, or electric vehicles.

The American Council on Renewable Energy (ACORE) unites finance, policy, and technology to accelerate the transition to a renewable energy economy. They focus on collaborative advocacy across the renewable energy sector.

The Solar Energy Industries Association® (SEIA) is leading the transformation to a clean energy economy, creating the framework for solar to achieve 30% of US electricity generation by 2030. SEIA works with its 1,000 member companies and other strategic partners to fight for policies that create jobs in every community and shape fair market rules that promote competition and the growth of reliable, low-cost solar power.

The United States Renewable Energy Association (USREA) is a membership-based association that promotes sustainable energy, alternative energy, energy efficiency, and clean renewable technologies. The association members include people that believe in renewable energy;, businesses and schools in the renewable industry; and renewable energy customers.

The Electric Drive Transportation Association (EDTA) is a trade association promoting battery, hybrid, plug-in hybrid and fuel cell electric drive technologies and infrastructure. EDTA conducts public policy advocacy, provides education and awareness, industry networking, and conferences. Their membership includes vehicle and equipment manufacturers, energy companies, technology developers, component suppliers, and government agencies.

American Clean Power is the voice of companies from across the clean power sector that are powering the US energy future and providing cost-effective solutions to the climate crisis while creating jobs, spurring massive investment in the US economy, and driving high-tech innovation across the nation.

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Carolyn Fortuna

Carolyn Fortuna, PhD, is a writer, researcher, and educator with a lifelong dedication to ecojustice. Carolyn has won awards from the Anti-Defamation League, The International Literacy Association, and The Leavey Foundation. Carolyn is a small-time investor in Tesla and an owner of a 2022 Tesla Model Y as well as a 2017 Chevy Bolt. Please follow Carolyn on Twitter and Facebook.

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