By Karlee Weinmann on Dec 11, 2024 12:01 am
As state lawmakers prepare to convene for their 2025 legislative sessions, they have a clear opportunity to rein in a common practice by monopoly utilities to charge their customers for inappropriate and unnecessary expenses, according to a new report from the Energy and Policy Institute.
The report includes real-world examples showing how the nation’s most prominent investor-owned utilities have routinely tried to charge customers — and often succeeded — for problematic expenses ranging from staff lobbying and slick corporate advertising, to private jet flights and spa services. Additionally, the report outlines policy solutions designed to protect utility customers from shouldering such expenses.
Preventing utilities from charging customers for these costs is crucial amid a steady churn of utility rate increases. In 2023, state utility regulators nationwide approved $9.7 billion in net electric rate increases – more than doubling the $4.4 billion in rate hikes they approved the previous year, according to the U.S. Energy Information Administration. The trend threatens to push more households into poverty, forcing them to choose between keeping their lights on and paying for other basic necessities like food and medication. In the 12 months preceding November 2024, adults in roughly one-quarter of households reported they were unable to pay an energy bill sometime in the prior year, U.S. Census data show.
As utility bills go up, most customers assume that these ever-rising costs at least pay for safe, reliable delivery of energy — not funding utility lobbying, corporate branding for these monopoly corporations, and even covering the costs of luxury lifestyle expenses for utility executives, board members, and employees. In a few states, lawmakers and regulators have taken action to help ensure that this is the case.
Colorado, Connecticut, and Maine have each enacted bills in recent years that prohibit utilities from charging their customers for political activities and certain other expenses. Eleven states have introduced similar measures, with several of those expected to resurface in the coming legislative session.
Where these laws have been implemented, they are already having measurable impact for customers. In Colorado, Xcel Energy gas customers will save $775,000 annually that they would have otherwise been forced to spend on the utility’s political expenses. More refunds may be in the works, after state utility regulators said Xcel’s lobbying disclosures were inadequate, and asked that they be refiled. Likewise, Avangrid gas customers in Connecticut will save over $555,000 annually under that state’s new utility accountability law, which prohibits cost recovery of industry membership dues, utility board members’ travel and meals expenses, and investor relations.
In states that have not yet taken legislative action, the prevailing method to fend off improper customer charges is onerous and imperfect. It relies on consumer advocates and staff from regulatory agencies to sift through thousands of pages of regulatory filings and reports, identify potentially problematic expenses, and then dispute them – often meeting resistance from the utility. Far from a foolproof way to protect customers from picking up the tab for unreasonable costs, it exacerbates the risk that utility bills will include at least some such costs.
But as the report shows, this doesn’t have to be the case. By providing a fresh investigation into the scale and scope of the problem, as well as a series of actionable policy solutions, the report instead demonstrates that it is possible — today — to rein in utilities and reduce costs and risks for utility customers.
Download the entire report as a (.pdf) here.
The post Report: Utilities charge customers for lobbying, corporate branding, and luxury lifestyle expenses appeared first on Energy and Policy Institute.
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