** Southwest Gas aims to make customers pay for its American Gas Association membership dues ([link removed])
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By Keriann Conroy on Dec 15, 2021 12:36 pm
Southwest Gas Corporation is asking Nevada regulators to allow it to charge its customers in Nevada hundreds of thousands of dollars in dues to support the gas utility’s membership in a trade association that is leading the industry’s political efforts to undermine policies to electrify buildings.

The request by Southwest Gas Corporation (SWG) – one of the largest gas utilities ([link removed]) in the nation, with over 2 million customers throughout Arizona, California, and Nevada – comes as part of an application to the Public Utilities Commission of Nevada ([link removed]) (PUCN) to increase retail gas rates by 5.6% and 3.81% in its Southern and Northern Nevada rate jurisdictions, respectively. SWG says the purpose of its broader rate increase request is to cover capital investment projects and a service expansion to Mesquite, NV, among other reasons.

The trade association that SWG is requesting its customers to fund, the American Gas Association ([link removed]) (AGA), has promoted gas-friendly building codes and coordinated efforts to pass laws that would make it more difficult for cities to adopt building electrification policies. AGA’s activities bolster Southwest Gas’ planned investments in fossil fuel infrastructure as it looks to maintain its long-term viability in its service states.


** AGA uses dues from utility customers to fight electrification
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Among costs included in the rate increase requests are 2021 membership dues for the AGA that total $664,594. It appears, according to SWG’s request, that AGA allocated only 3.8%, or $25,255, of those dues to lobbying for 2021, which SWG deducted from Account 930.2 ([link removed]) . Utilities typically request permission to recover expenditures they have placed in the 930.2 account in rate case proceedings.

View note ([link removed])

In 2020, AGA reported over $30.2 million in revenue, of which $28 million came from utility membership dues ([link removed]) , according to the trade association’s tax filings. Utilities like SWG then pass these fees on to their customers to pay each month through their gas bills if regulators allow them to do so in a rate case. AGA has used this revenue to coordinate efforts to block local action to cut greenhouse gas emissions.

Beyond coordinating legislative efforts, the trade group also launched ad campaigns ([link removed]) on Facebook and Instagram in an effort to improve public perceptions of cooking with gas after years of research ([link removed]) has shown that pollutants released by gas stoves have negative health effects.
AGA is promoting costly renewable natural gas ([link removed]) as part of a strategy to “mitigate the opposition’s fervor against infrastructure expansion ([link removed]) .” The trade group is also working to “help ensure that AGA positions are successful ([link removed]) ” at the International Code Council, which sets model building code standards for cities.

While SWG is offering to excise the 3.8% carve-out of lobbying funds from its dues requests, the money for the remaining AGA dues would presumably support AGA’s communication and public relations activities. One recent AGA communication activity was a $4.5 million contract with the public relations firm DDC Public Affairs ([link removed]) . The contract details involved the execution of the campaign “Your Energy America,” to promote midstream gas pipelines through the deployment of astroturf groups feigning grassroots advocacy. AGA’s communications department alone constituted 11 percent of the organization’s total program budget in 2019, according to the trade group’s financial statements. AGA’s Governmental Affairs and Public Policy Department comprised roughly 14 percent of AGA’s 2021 program budget, its Energy Markets,
Analysis, and Standards Program comprised 12 percent, and its Office of General Counsel & Regulatory Affairs comprised another 9 percent.


** SWG is fighting electrification in Nevada, Arizona
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The battles that AGA has fought around the country to maintain gas utilities viability as cities and states move toward building electrification as a way to address climate change have touched down in SWG’s primary jurisdictions of Arizona and Nevada.

In 2020, Arizona’s legislature passed ([link removed]) HB 2686, which banned cities and towns from passing codes or ordinances that could restrict the use of service from a utility provider. HB 2686 passed despite the plans of many Arizona cities to achieve an 80 percent reduction in GHG emissions by 2050. The cities of Phoenix and Tucson opposed ([link removed]) the legislation. SWG supported the legislation and gave thousands of dollars ([link removed]) to the campaigns of Arizona Senate President Karen Fann and Speaker of the House Rusty Bowers weeks ahead of those legislators’ introduction of the legislation favorable to the utility. The law became a template for other states to pass similar policies preempting cities from taking action.

AGA’s executives have denied the group’s role in “coordinating” those legislative efforts, likely because regulators often forbid member utilities like SWG from recovering costs of political advocacy from customers.

But AGA internal documents and audio recordings obtained and published by NPR ([link removed]) suggest otherwise:

‘“We have run pro-gas choice legislation [in] Arizona, Tennessee, Louisiana … and Oklahoma. And so those states now, you have an option. You can’t deny someone natural gas service in their home,’ the AGA’s George Lowe told colleagues during an industry conference ([link removed]) last November. Lowe, vice president of governmental affairs and public policy, said AGA member companies were eyeing 15 to 20 other states to pass similar bills this year.”’

In Nevada, Governor Steve Sisolak committed the state to reach net-zero emissions by 2050. During the 2021 legislative session, bill AB 380 — intended to introduce a managed phase-out of natural gas in buildings – died in committee ([link removed]) . SWG mobilized ([link removed]) chambers of commerce, public officials, and unions to defeat the legislation.


** Pushback against utilities recovering trade association dues
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Intervenors, commission staff, and regulators around the country are increasingly voicing concerns over utilities’ recovery of trade association dues in rate cases without proving the clear benefit customers receive for paying these fees. In Arizona, utility regulators recently agreed with the Residential Utility Consumer Office’s recommendation ([link removed]) to allow Arizona Public Service to recover only 50% of its industry association dues. APS will now only be entitled to recover $1.17 million through rates for industry dues, rather than $3.58 million originally requested. The ruling may provide precedent for SWG’s rate case filed ([link removed]) on December 3. Other states have gone further in their orders. For example, Kentucky regulators ruled
([link removed]) in June 2021 that Kentucky Utilities’ cannot recover any of its dues to the Edison Electric Institute, the equivalent trade association to AGA for electric utilities, from ratepayers. The regulators said that the utility did not demonstrate how the trade association dues were “fair, just and reasonable.”

A similar question also sits before the Federal Energy Regulatory Commision (FERC). The Center for Biological Diversity (CBD) petitioned ([link removed]) for a rulemaking to amend the Uniform System of Accounts to require that utilities record their trade association dues as presumptively non-recoverable (below-the-line and charged to shareholders) for rate recovery purposes.

Dozens of environmental groups, clean energy and consumer advocates – including the Nevada Attorney General’s Bureau of Consumer Protection (BCP), which participates in Nevada rate cases on behalf of customers – filed comments supporting the CBD petition. In their comments filed with FERC, the BCP wrote ([link removed]) ,

“By virtue of including trade associations costs and dues in Account 930.2 where those costs are presumed recoverable, the burden shifts from the utility companies to other groups, including the BCP, to argue against including these costs in rates. Instead, BCP agrees that trade association costs should be included in an account – Account 426 – where the utility has to justify inclusion of these costs rather than the other way around. Consumer advocates like the BCP do not have the same amount of resources available to them as private companies like utilities. By treating trade association costs as presumed non-recoverable, customers are prevented from being required to pay for costs and dues that act against the interests of the customers.” (Emphasis added)

FERC is scheduled ([link removed]) to respond to CBD’s petition during its December 16 open meeting.

In Southwest Gas’ Nevada rate case, intervenors including the BCP will file direct testimony by January 14.

Featured image source: Southwest Gas Shareholder Update 2015, YouTube ([link removed]) .

The post Southwest Gas aims to make customers pay for its American Gas Association membership dues ([link removed]) appeared first on Energy and Policy Institute ([link removed]) .
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