The utility practice of using ratepayer funds to pay for a utility’s trade association dues will be the subject of a new Federal Energy Regulatory Commission (FERC) inquiry.
At its December 16 meeting, FERC issued a Notice of Inquiry (NOI) to examine the rate recovery, reporting and accounting treatment of utility industry association dues as well as civic, political and related expenses. It also will look at whether additional transparency is needed to define utility donations for charitable, social or community welfare purposes.
The NOI was issued following a March petition filed by the Center for Biological Diversity. In the petition, the group claimed that charging ratepayers for, in some cases, millions of dollars to pay dues for groups like the Edison Electric Institute (EEI) is “common among utilities.” It said that in 2019, the Public Service Commission of Wisconsin authorized charging ratepayers almost $500,000 in EEI dues. And in 2020, the California Public Utilities Commission approved charging ratepayers $300,000 for EEI dues.
The petition also alleged that the practice violates ratepayer rights as well as the First Amendment.
“This notice is an important first step toward keeping corporate utilities from diverting customers’ money to anti-environment trade groups,” said Howard Crystal, the center’s legal director.
The FERC NOI seeks comment on 22 questions focused in three areas:
- Delineation of recoverable and non-recoverable industry association dues by member utilities for rate purposes;
- Increased transparency in industry association expenses and segments of industry association dues charged to utilities as well as utilities’ and industry associations’ expenses from civic, political and related activities; and
- A framework for guidance should FERC determine action is necessary to further define the recoverability of industry association dues charged to utilities and/or utilities’ expenses from civic, political and related activities.
At present, FERC does not have a “bright-line rule” delineating between recoverable expenses and those excluded from rate recovery. Instead, it allows regulated entities to determine the portion of their industry association dues to include in either accounts, based on information provided by the industry associations about their activities and associated costs. The Commission generally considers the appropriate delineation between the two classes of expenses on a case-by-case basis.
Initial comments are due 60 days after the date of publication of the notice in the Federal Register. Reply comments are due 90 days after the date of publication in the Federal Register.