New bill aims to stop Colorado utilities from spending ratepayer money on politics

A new bill in Colorado would stop investor-owned utility companies from using ratepayer money to fund lobbying, trade associations, promotional advertising, and other political influence efforts. 

Colorado Senate President Steve Fenberg introduced the bill on Tuesday, following a series of hearings held in March by the Joint Select Committee on Rising Utility Rates. In addition to new rules limiting utilities from using ratepayer money for politics, the bill includes other ratepayer protections such as directing the Colorado Public Utilities Commission to establish rules limiting how much investor-owned utilities can charge ratepayers for lawyers and consultants that argue on behalf of the utility’s efforts to raise rates, ending ratepayer subsidies for extending gas pipelines to new construction, and more.

The bill and hearings followed months of pressure from Colorado ratepayers on utilities, regulators, and policymakers in response to high gas and electricity bills this winter driven by high methane gas prices, and increased public scrutiny of how utilities fund their political influence efforts in Colorado.

Bill would stop investor-owned utilities from charging ratepayers for lobbying expenses

The bill prohibits investor-owned utilities from charging Colorado ratepayers for “Expenses for lobbying or other activities meant to influence the outcome of any local, state, or federal legislation, ordinance, resolution, or ballot measure.”

During a March 14 hearing held by the Joint Select Committee on Rising Utility Rates, Colorado legislators asked executives of Xcel Energy, Black Hills Energy, and Atmos Energy how they defined lobbying.

“Can you please define what lobbying means to you as an organization,” asked Representative Matthew Martinez of ​​Bob Kenney, Xcel Colorado President, and Nick Wagner, Black Hills Energy Vice President of Colorado Regulatory Affairs and Policy.

Kenney’s response suggested Xcel defines lobbying in broad terms: “Two things, I think it’s participating in the democratic process to educate and inform our policymakers. That’s how I would define it at a very high level. And then, you didn’t ask this but it’s implicit in the question, our customers don’t pay for our lobbying fees.”

Senate President Fenberg pressed Kenney for a more specific answer: “Customers don’t pay for lobbying expenses. But what do you exactly define as lobbying? Is this considered lobbying, right now? Or is it only when there’s a bill up in committee that could be voted yes or no on?”

“There is a technical definition of what lobbying is, I mean we use outside consultants and those fees do not flow through rates,” responded Kenney.

Wagner of Black Hills Energy responded: “With respect to lobbying, anything that we’re doing that is a participation in the process of bill making, what the work that you guys do up here, we would consider that lobbying. And again, our customers do not pay for that when we go in for cases, for rate cases, those dollars are pulled out of any revenue requirement or anything that we put forth.”

But reports submitted by the utilities to the Colorado Public Utilities Commission (PUC) show the companies sometimes use a much narrower definition of lobbying – and fail to disclose all their lobbying expenses, even in instances when a CEO publicly testified against high-profile legislation.

Xcel Energy’s 2021 annual report submitted to the PUC disclosed $405,542 in lobbying expenses that year, and lists four contract lobbyists and three staff lobbyists – each of which apparently spent precisely 20.12% of their time lobbying.

But in March 2021, Xcel Energy President Alice Jackson testified against legislation that requires Xcel and other utilities in Colorado to join a regional transmission organization by 2030, and created the Colorado Electric Transmission Authority.

“We are expressing strong opposition to the RTO mandate and the Colorado Transmission Authority contained within the bill, unless more can be done to protect Colorado energy customers. Absent these protections I respectfully request that you vote that this bill is not to move forward,” Jackson told the Senate Transportation and Energy Committee.

The Xcel Energy report submitted to the PUC does not list Jackson among the people that lobbied on behalf of the company in 2021. The report includes a sworn statement from Jackson that it is “true and correct to the best of my knowledge, information, and belief.”

Annual reports submitted to the PUC show that other investor-owned utilities also use a narrow definition of lobbying when disclosing lobbying expenses. Atmos Energy’s 2021 report disclosed $49,500 for a single lobbyist, while Black Hills Energy’s reports disclose a total of $426,906 in lobbying expenses in 2021, the most recent year available.

The bill’s definition of lobbying does not include efforts by utilities to influence regulations, which could allow utilities to continue charging customers for those political expenses. Atmos Energy, for instance, lobbied aggressively against pro-electrification building code changes in Gunnison, Colorado. Building codes are rules, not legislation, so the current bill language could allow Atmos to charge customers for all the money that it spent on that political effort, or similar ones undertaken by Colorado utilities in the future. 

Bill would stop investor-owned utilities from charging ratepayers for payments to trade associations

The bill would also prohibit investor-owned utilities from charging their ratepayers for “Organization or membership dues, or other contributions, to any organization, association, institution, corporation, or other entity that engages in lobbying or other similar activities intended to influence the outcome of any local, state, or federal legislation, ordinance, resolution, rule, ballot measure, or other regulatory decision.”

That means Colorado ratepayers would no longer be forced to pay for the money that investor-owned utilities send to trade associations like the American Gas Association, Edison Electric Institute, and other industry groups.

Investor-owned utilities charge ratepayers for most of their payments to trade associations, and only charge shareholders for a relatively small portion of the dues that the trade associations determine were used for lobbying. But trade associations spend millions on public relations efforts and other campaigns designed to bolster their industry’s image and influence policymakers, which they don’t classify as lobbying.

For example, the American Gas Association (AGA) claims that just 3.8% of the dues it collected from its member utilities in 2021 went to lobbying. But that figure doesn’t include the group’s campaign against state electrification policy efforts, including in Colorado. 

In one presentation, an AGA executive advised gas utilities to “Build a local and/or state consumer coalition to serve as the spokesperson for the natural gas industry”

The AGA executive explained the strategy:

Speaking of Coalitions, we have convened the national group of end users and consumers to help carry our message. Again, we keep hearing from our message testing the industry talking about industry isn’t effective. We really need our end users like AARP, the restaurants, home builders, laborers, and agricultural – farmers specifically, are the more effective voices for us out there. So we talked twice monthly. With our coalition partners, we have used them to testify in cases in front of the legislators as well as at city councils. We are also increasing our outreach to include local mayors, legislators, African American groups, and all kinds of different folks so that we have more friends on our side willing to talk about how great natural gas is.

In Colorado, that gas utility industry front group is “Coloradans for Energy Access,” which launched in 2022 to oppose the state’s electrification policy efforts.

The group follows the AGA playbook, using the voices of groups more likely to influence Colorado policymakers, even as its 2021 tax documents show that its board of directors is entirely composed of representatives from Colorado’s four investor-owned gas utilities: Xcel Energy, Atmos Energy, Black Hills Energy, and Colorado Natural Gas.

And while each gas utility company told Colorado Public Radio that they did not use ratepayer money to fund Coloradans for Energy Access, the American Gas Association also disclosed paying $50,000 to the group in 2021, which likely came in part from Colorado ratepayers.

Further Reading

Energy and Policy Institute report: Getting Politics Out of Utility Bills; How policymakers can protect customers from being forced to fund utilities’ political machines

SB23-291: Utility Regulation; Concerning the public utilities commission’s regulation of energy utilities

Colorado Joint Select Committee on Rising Utility Rates hearings

Colorado Public Interest Research Group: New proposal will tackle high utility bills

Western Resources Advocates: Proposed Utility Regulation Act a Critical Step in Protecting Coloradans From Future Fossil Fuel Rate Spikes

Colorado Sun: State lawmakers introduce big measure attempting to rein in Coloradans’ utility bills. Here’s what it does

Colorado Public Radio: Xcel’s winter of discontent