Power, gas industry groups oppose petition to change rules on trade association dues

Most major power and gas industry groups and their utility memberships strongly opposed a proposed change to accounting rules impacting dues paid to trade associations sought by the Center for Biological Diversity, or CBD.

CBD in March asked the Federal Energy Regulatory Commission to change its accounting rules to no longer presume that dues paid to trade associations that engage in lobbying or other influence-related activities can be recovered in rates.

The environmental group argued in a petition for rulemaking (RM21-15) that the Edison Electric Institute, or EEI, and other trade groups "engage in and support controversial political activities," such as "lobbying, campaign-related donations, and litigation." Because of this, CBD said FERC should amend its accounting rules to require that all industry association dues be recorded in a way that makes those dues presumptively nonrecoverable instead of recoverable, thereby placing the burden on utilities to show why those dues should be passed on to ratepayers.

FERC already bars utilities from forcing ratepayers to fund their political activities. Utilities are therefore required to account for the cost of their trade groups' lobbying activities in a way that does not become recoverable in rates.

But FERC has acknowledged the lack of a "clearly delineated" line between the kinds of influence-related expenditures that may and may not be recoverable in rates, CBD said in its petition. Given that utilities pay millions of dollars in dues to industry associations like EEI that are routinely charged to ratepayers, the center wants FERC to reexamine the issue.

Redefining lobbying

EEI, in comments due to the commission April 26, called on FERC to deny the petition, contending it was a "thinly veiled" attempt to get FERC to redefine what should be deemed lobbying, an action only Congress can undertake.

The investor-owned utility trade group asserted that the petition "fails to demonstrate that a sufficient change in circumstances has occurred or a problem exists that merits a generic solution as no money EEI may spend on lobbying activity is currently recoverable in rates that are subject to the jurisdiction of the commission or state economic regulators."

Rather, CBD seeks to have trade groups' activities with which it disagrees classified as lobbying, EEI said, adding that CBD made "several misleading and incorrect statements" about EEI and its members' positions on clean energy and climate policies in an effort to cast the utility group's activities as political in nature.

"EEI's lobbying-related dues are accounted for appropriately within the current [Uniform System of Accounts] framework, and any infrequent errors in this accounting are identified through regular audit procedures and then rectified," EEI said. "Accordingly, a rulemaking to explore different accounting treatment for trade association dues is neither necessary nor warranted."

Status quo

The Nuclear Energy Institute similarly opposed CBD's petition as "flatly wrong," saying it misconstrued how trade groups' activities benefit customers and advance decarbonization. NEI also contended that the petition was "premised on a flawed understanding of how industry associations and their members treat the lobbying-related portion of trade association dues."

The American Gas Association, or AGA, Interstate Natural Gas Association of America, New York transmission owners, National Grid USA, Duke Energy and the transmission advocacy group WIRES also asked FERC to deny the petition, asserting a litany of misconceptions in CBD's filing and that the status quo already ensured that lobbying-related industry dues were not recovered in rates. Transmission owners in PJM Interconnection did not specifically address the petition, but instead filed comments on the benefits to customers from utility membership in industry associations, pointing to programs offered by EEI as examples.

Support for petition

Meantime, the Solar Energy Industries Association, or SEIA, supported the petition on the grounds that "the voices of historically marginalized communities are rarely heard" when utilities recover association dues from captive customers.

Using EEI as an example, SEIA said there was "no indication that EEI's narrow category of 'influencing legislation' is an appropriate proxy for the broad influence restrictions set forth in Account No. 426.4," the account designated for recording fees for lobbying activities. "Second, there is no indication that EEI's allocations have been tested or examined by any interested party or regulatory commission."

While EEI may have a track record of providing value to ratepayers, "a number of associations do not share EEI's reputation or mission," and many of those trade groups funded by utilities "do not consider frontline communities and some ... actively advocate against these communities," SEIA said.

As such, SEIA urged FERC to examine its accounting rules and make clear that influence-related spending should not be recoverable from ratepayers.

Organizations including Earthjustice, Sierra Club, Clean Air Council, Friends of the Earth, POWER Interfaith and Southern Environmental Law Center also threw their support behind the petition for rulemaking.

"Trade associations like [EEI and AGA] act in the interests of their corporate members, which are often contrary to the interests of those members' captive ratepayers," the organizations said. "However, captive ratepayers are currently footing the bill for the lion's share of EEI and AGA's activities."

The presumption that industry association dues are recoverable often ends "up enabling utilities' evasion of legal prohibitions on the recovery of promotional and political advertising expenses, thereby forcing ratepayers to bear the cost of advocacy that is not in their interests," the groups said.