Louisiana state regulators advanced a proposal June 7 to look into how and whether utilities use ratepayer funds for political spending.
The Louisiana Public Service Commission voted 3-2 during a regular meeting to advance the proposal, which directs staff to open a docket initiating the investigation. District 3 Commissioner Davante Lewis, who made the proposal, along with District 2 Commissioner Craig Greene and Chairman and District 5 Commissioner Foster Campbell, voted to approve the measure.
District 1 Commissioner Eric Skrmetta and District 4 Commissioner Mike Francis opposed the measure, saying they believed the current commission audit process to be sufficient for oversight of such utility spending. They referred to the proposal as "redundant" and a "fishing expedition."
The commission does not have a specific rule for auditing political spending but requires utilities to report outside expenditures on consultants, engineering firms and others, commission Executive Secretary Brandon Frey said. While it has been the "typical practice" for the commission to direct utilities to exclude ratepayer funds from political spending, the commission does not have a policy explicitly disallowing it, Frey said. There have also been incidents in the past where staff or commissioners were not aware certain expenses were funded with ratepayer money that perhaps should not have been, Frey added, though he did not elaborate.
Lewis said while he respected that the commission has an existing audit process, the regulatory body lacks clear rules or definitions surrounding utilities' ability to use ratepayer funds for political purposes and also lacks enforcement measures.
"This is about transparency," Lewis, the commission's newest member, said. "I'm getting the sense from the [investor-owned utilities] you don't want transparency."
Larry Hand, acting vice president for regulatory and public affairs at Entergy Corp. subsidiary Entergy Louisiana LLC, the state's largest electric utility, said the utility acknowledged there is "no formal rule" on its spending ratepayer funds on politics, such as elections or lobbying. "Our practice for many decades has been to remove all political spending, lobbying expenses, advertising that's more brand promotion, we remove all that from rates," Hand said.
Hand also advocates for the company's lobbying efforts at the state and federal levels, which he said benefit ratepayers.
"I don't think lobbying expenses, de facto, would have to be excluded," Hand said.
Greene, however, appeared to take issue with Hand's assertions.
"To all the [investor-owned utilities], I appreciate you're trying to save money, but please don't ask the residents and the businesses to thank y'all for lobbyists and attorneys, especially when we're trying to fight y'all at FERC," Greene said, referring to complaints filed with the Federal Energy Regulatory Commission against Entergy related to investments and performance at the Grand Gulf nuclear plant.
"It just gets, like, a very dysfunctional family," Greene added.
Entergy has already been under state regulator scrutiny for its profits and spending in other areas, such as executive compensation, as pressure on customer bills increases.
Other states have taken a closer look at utility spending and what expenses they seek to recover from ratepayers. Colorado Gov. Jared Polis in May signed into law legislation that would, among other things, prohibit electric and gas utilities from recovering through consumer rates expenses related to lobbying on legislation or ballot measures, certain advertising expenses, membership dues, and tax penalties or fines.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.
