Matt Kasper Customers of We Energies are currently on the hook to pay nearly $2 million a year for the monopoly utility’s corporate membership in various trade associations and organizations that practice political advocacy.
Earthjustice attorneys on behalf of Sierra Club uncovered that the utility added $1.98 million for various corporate membership fees to its proposed revenue requirement, which is the total amount of money authorized by the Public Service Commission for We Energies to collect from customers through electric and gas bills. The revenue requirement is money used for investing in and maintaining the electrical and gas grid, as well as paying staff and their pensions.
Sierra Club submitted questions to the utility asking for a list of all the dues for trade associations and not-for-profit entities that the company seeks to recover through rates. We Energies provided an index of dozens of entities, with the Edison Electric Institute and the American Gas Association topping the list at $962,262 and $374,806 respectively.
We Energies assures that customers “typically” are protected from being forced to pay these annual fees to trade groups. However, the practice of including the fees in the revenue requirement does not guarantee customers are actually protected.
In an email to the Energy and Policy Institute, spokesman Brendan Conway said the company breaks out “any dues used for political purposes” and “because dues and memberships are part of our business, they are included in the initial revenue requirement, but they are typically disallowed and we take that into account when we estimate future rates.”
EPI asked We Energies to clarify why, if dues are typically disallowed, it is attempting to add the $1.98 million to the revenue requirement in the first place, instead of treating it as dollars spent on political purposes such as lobbying and political contributions.
Conway responded: “We belong to trade organizations that help us in our mission to provide safe, affordable and reliable energy. For instance, because of our membership in EPRI we were able to take part in an important study this year about the impact and mitigation strategies of a high-altitude electromagnetic pulse. Since these membership[s] benefit customers, we include those costs in our rate request.”
If the PSC authorizes a revenue requirement that is less than what the utility requested, then We Energies may claim that the deduction applied to potentially controversial items, such as dues to political trade associations. A proposed settlement between the utility, the Citizens Utility Board of Wisconsin, and the Wisconsin Industrial Energy Group proposes to reduce the original rate increase request by $76 million for the electric utility.
Commission staff have proposed a reduction in trade association dues, but do not list which groups would be prevented from receiving customer money, nor do they provide a reason for the reduction other than to say it is “consistent with past Commission staff practice.”
Earthjustice attorney David Bender, who is representing Sierra Club in the case, said that unless the the PSC specifically itemizes reductions to apply to trade association spending, it means that spending is included in the overall authorized amount, and customers are still footing the bill.
“Unless the PSC explicitly excludes dues to utility front groups from the authorized revenue requirement, utility claims that those costs were excluded in an unenumerated adjustment to the utility’s revenue request is disingenuous,” Bender said.
In April, California utility regulators did exactly that, by specifically disallowing the utility Southern California Edison (SCE) from making customers pay for its annual EEI dues as part of its decision in determining gas and electric rates. As stated in the proposed decision on May 16:
“SCE has failed to present supporting evidence which would enable us to determine how much EEI’s beneficial services should cost ratepayers. We find SCE has not met its burden to establish any portion of the EEI dues are recoverable from ratepayers.”
While likely unknown to We Energies customers, EEI and AGA are influential and politically active trade associations that promote policies that are often not in the best interests of ratepayers.
EEI has helped its member companies like We Energies run a campaign against rooftop solar for several years. As part of this campaign, EEI and its members pushed a model bill through the American Legislative Exchange Council (ALEC) to get state legislators to lower the credit solar customers receive for selling their excess electricity back to the grid. States like Indiana, Michigan, and Kentucky have passed laws that have targeted net metering tasking utility regulators to change the compensation methods. Michigan utility regulators recently granted permission to Detroit-based DTE Energy to end its net metering program and replace it with a separate process that will ultimately affect the payback for solar customers.
We Energies has also worked to limit the market for residential rooftop solar. In its current rate case, the utility had originally attempted to levy a solar charge of $3.53 per kilowatt that customers generate. If approved, the fee would have forced residential solar customers to pay about $180 more per year. Commercial customers and small business owners with solar would have had to pay over $4,000 a year. But the solar fee was dropped from the rate case after We Energies and RENEW Wisconsin reached a settlement last month.
EEI’s own annual reports, which are provided by the trade group to We Energies and other utilities reveal “results” the trade association achieved, such as its advocacy for increased fixed fees on electric bills and demand charges. Other priorities over the years for EEI have dealt with Environmental Protection Agency regulations and litigation over the agency’s air and water rules.
Like EEI, AGA helps its members by advocating for the increased development of natural gas and pipeline infrastructure. In 2017, Huffington Post obtained documents that detailed AGA’s strategy to utilize a front group to undermine protesters of new gas infrastructure and their concerns about climate change, environmental damage, and landowners’ property rights.
AGA political staffers also traveled across the country last year to advocate at energy and regulatory conferences on the trade group’s effort to push back against efforts to electrify buildings.
Environmental organizations, consumer advocates, and state attorneys general have contested the payments to political groups in other utility rate cases.
The Minnesota Office of the Attorney General submitted testimony in a rate case to contest the practice of charging customers for political dues, including EEI dues, and said that while utilities say they partition out EEI’s lobbying costs from what they ask customers to pay, those lobbying costs are “not inclusive of all activities that lead to favorable regulatory and policy outcomes that benefit the utility.”
Direct testimony submitted in the recent DTE Energy rate case by Karl Rabago on behalf of the Michigan Environmental Council, Natural Resources Defense Council, and Sierra Club similarly emphasized the political nature of trade groups like EEI: “The problem is that EEI acts as [an] advocacy organization in supporting policy agenda contrary to many ratepayers’ interests or personal beliefs, and contrary to the policies of the State of Michigan.”
In addition to EEI and AGA, We Energies customers could be forced to pay for the annual contributions to other groups like the Metropolitan Milwaukee Association of Commerce, Wisconsin Manufacturers & Commerce, and the Wisconsin Utilities Association. Sierra Club’s testimony, which was filed on Wednesday, requests that the PSC not allow the utility to recovery payments to these groups until it can demonstrate that the expenses “benefit ratepayers by improving utility operations or cutting costs.”
