STATE OF NEW HAMPSHIRE
CONSUMER ADVOCATE
D. Maurice Kreis

TDD Access: Relay NH
1-800-735-2964
Tel. (603) 271-1172

ASSISTANT CONSUMER
ADVOCATE
Pradip K. Chattopadhyay

OFFICE OF THE CONSUMER ADVOCATE
21 S. Fruit St., Suite 18
Concord, N.H. 03301-2429

Website:
www.oca.nh.gov

March 12, 2019
TESTIMONY OF THE NEW HAMPSHIRE OFFICE OF THE CONSUMER ADVOCATE
ON SB 206, AN ACT RELATIVE TO EXCLUDING THE COST OF LOBBYING AND POLITICAL ACTIVITY
FROM THE RATES OF PUBLIC UTILITIES
Chair Fuller Clark, honorable members of the Committee:
My name is Brian Buckley and I am the Staff Attorney with the New Hampshire Office of the
Consumer Advocate. Pursuant to RSA 363:28, the Office of the Consumer Advocate is tasked
with representing the interests of residential utility customers at the Public Utilities
Commission and before other bodies, including this one. I am before your Committee today to
speak in support of SB 206 because excluding the costs of lobbying and other political activity
from recovery in the rates of public utilities is good for the ratepayers I represent. In support of
this proposition, I make three arguments.
First, the manner in which utility trade associations such as the Edison Electric Institute (EEI)
and the American Gas Association (AGA) classify expenses and activities lacks transparency. For
example, the last NARUC audit of EEI spending data was 14 years ago. To be clear, there are
some benefits that EEI, AGA, and other trade associations offer that should be recoverable from
ratepayers such as mutual assistance programs for extreme weather events and knowledge
campaigns centered around electrical and gas safety, but how the AGA and EEI allot trade
association dues between those activities and those that might relate to political activity,
lobbying, or advocacy is obscure at best. To my written testimony I have attached a report from
the Energy and Policy Institute which details and supports these assertions.
Second, New Hampshire is not unique in identifying this as an issue of importance;
policymakers and regulators in neighboring jurisdictions have also begun to recognize this as an
issue which deserves their attention. For example, several years ago in Massachusetts, the
Department of Public Utilities (DPU) disallowed various trade association dues and nonprofit
contributions unless the utilities could show those organizations provided a direct benefit to
Massachusetts’ ratepayers. Consumer advocates in California, Missouri, and New York have
made similar pushes for disallowance of these above-the line trade association contributions.
Third, although PUC rule 310.02 does in fact prohibit recovery of expenses related to
promotional, political, and institutional activities, codifying that prohibition would provide an

 even greater assurance to ratepayers that this rule will continue to remain in place for the
foreseeable future. More importantly, if this bill were to become law, our office would be able
to speak with the authority of the legislature in settlement negotiations at the Public Utilities
Commission when demanding an investor-owned utility carry the full burden of proof in
demonstrating its trade association dues did not go, directly or indirectly, towards lobbying ,
issue advocacy, other political activities. And let me assure you, the authority of this honorable
body carries great weight with the Commission and the public utilities it oversees.
Because New Hampshire’s ratepayers stand to draw substantial benefits from the proposed
codification of the prohibition on recovery of political and lobbying activities from the rates of
public utilities, I respectfully request that you report this bill out of committee “ought to pass .”
Thank you for considering my views. I would be happy to answer any questions.

Sincerely,

Brian D. Buckley
Staff Attorney
Office of the Consumer Advocate

 Paying for Utility Politics
How utility ratepayers are forced to fund the Edison Electric
Institute and other political organizations
May 2017

ENERGY AND POLICY INSTITUTE

1

 Paying for Utility Politics
How utility ratepayers are forced to fund the Edison Electric
Institute and other political organizations

May 2017

The Energy and Policy Institute is a watchdog organization working to expose
attacks on renewable energy and counter misinformation by fossil fuel and utility
interests. It does not receive funding from for-profit corporations or grants from
government agencies.

Authors
David Anderson
Matt Kasper
David Pomerantz

ENERGY AND POLICY INSTITUTE

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 Table of Contents
Executive Summary

4

I. EEI’s Revenue, Expenses, Actions - and Why Ratepayers Shouldn’t Be Paying for It

8

II. Utility Companies Charging Ratepayers for EEI Dues

19

III. Other Political Organizations Receiving Ratepayer Money

25

III. Utility Pushback Against Oversight of Their EEI Dues

30

IV. Waning Regulatory Oversight of Ratepayers Paying for Political Membership Dues

39

Recommendations

41

Appendix I: Tables of Selected Utilities’ Requests for Ratepayer Money to Fund EEI Dues, and
Challenges to Requests
43
Appendix II: Sample Discovery Questions

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3

 Executive Summary
This report explores how regulated utility companies are including their Edison Electric
Institute (EEI) annual payments, along with payments to other trade associations, in their
operating expenses. The widespread practice forces ratepayers to pay for political and public
relations activities with which they may not agree, and from which they do not benefit. It also
has the effect of ratepayers subsidizing the political activities of EEI and other trade
associations. Utility commissions have a responsibility to protect ratepayers from paying for
industry groups and their political work along with public relations activities. But utilities have
become adroit at using EEI, and other organizations, to effectively and quietly influence policy
while sheltering their shareholders from the bulk of the associated costs. Almost no other
political organizations have the luxury of subsidization enjoyed by EEI and other
representatives of the regulated utility industry.

EEI’s Revenue, Expenses, Actions - and Why Ratepayers Shouldn’t Be Paying for it
EEI is an inherently political organization, and a powerful one. At $90 million in 2015, EEI’s
budget is the highest it has been in over a decade, an increase which the nation’s electric
ratepayers have funded. President Thomas Kuhn made $4.1 million in 2015 and is one of the
highest paid industry association executives. The association’s budget is primarily spent on
staff, many of whom spend a considerable amount of their time working to help member
utilities achieve desired policy and regulatory outcomes; not all of these activities are
considered lobbying under the definition EEI uses from the Internal Revenue Code, but their
actions are still political in nature.
In EEI’s own words, in 2015 it “rebalanced the public conversation through extensive earned
media efforts at the national and state levels” to address fixed-cost recovery, “educated
regulators and consumers advocates on key industry issues, including capital expenditures
that highlight the record-high investments in the grid”; and spent time to make sure that the
Federal Energy Regulatory Commission (FERC) “provides compensatory returns on equity
that recognize the risks associated with transmission construction.”1
These activities are intended to benefit utilities’ bottom line, and it is likely that none would
count in EEI’s definition of lobbying, which many utility commissions use to determine which
fees should not be borne by ratepayers.
1 EEI 2015 Results In Review available at http://big.assets.huffingtonpost.com/eeibooklet.pdf; EEI’s 2016 Wall Street Briefing available at
http://web.archive.org/web/20160715202904/http://www.eei.org/resourcesandmedia/industrydataanalysis/industryfinancialanalysis/
Documents/Wall_Street_Briefing.pdf.

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 Utility Companies Charging Ratepayers for EEI Dues
Electric utility ratepayers are paying for EEI’s activities when an investor-owned utility
includes payments to EEI (and other industry trade associations) as part of the company’s
cost of service in rate requests. Public utility commissioners generally approve a substantial
portion of these dues with only minimal oversight, with some notable exceptions. Utility
ratepayers are usually unaware that a portion of their electricity bill is going to subsidize EEI.
In Florida Power & Light’s 2016 rate request, for example, the utility revealed that its
ratepayers are on tap to pay more than $9.5 million in EEI dues from 2015 to 2018.2 These
EEI dues went unchallenged during the Florida Public Service Commission’s consideration of
the utility’s request to raise rates on ratepayers. A table listing examples of more than two
dozen companies recovering their EEI dues from ratepayers is included in an appendix of this
report.
Other Political Organizations Beyond EEI Receive Utility Ratepayers Money
EEI is not the only political organization that receives money from utility ratepayers. The
American Gas Association, Nuclear Energy Institute, and the U.S. Chamber of Commerce,
for example, are all groups that are often included in rate requests so that ratepayers pay for
the utility’s annual membership fees. Given how these organizations promote fracking and
natural gas infrastructure,3 propose bailouts for nuclear power plants,4 and spread
misinformation regarding the science of climate change,5 they are also all political in nature.
An examination of Wisconsin Public Service Corporation classification of industry association
dues, for example, reveals that the utility proposed that its ratepayers help pay for not only
the American Gas Association and the U.S. Chamber of Commerce membership fees, but
also both the Republican and Democratic Governors Associations, and the Republican State
Leadership Committee.6

Florida Power & Light Industry Association Dues (MFR C-15 draft) available at https://drive.google.com/file/d/
0B-0ZwtRThY3LVjRjSVVPTjZ6N28/view
2

American Gas Association, “Responsible Natural Gas Development” available at https://www.aga.org/environment/responsible-naturalgas-development
3

Nuclear Energy Institute, “Incentives for Energy Production” available at https://www.nei.org/Issues-Policy/Economics/Incentives-forEnergy-Production
4

Union of Concerned Scientists, “Who Stands with the U.S. Chamber of Commerce on Climate Change? New Data Says Few (Still)”
available at http://blog.ucsusa.org/gretchen-goldman/who-stands-with-the-u-s-chamber-of-commerce-on-climate-change-new-data-saysfew-still-788
5

Wisconsin Public Service Corporation Governmental Relations/Memberships (Docket 6690-UR-124) available at https://
www.documentcloud.org/documents/3227546-Wisconsin-Public-Service-Corporation-Dues.html
6

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 Often these payments are tucked in among industry association dues payments to less
political institutions that have been recognized as providing beneficial services, such as the
Electric Power Research Institute or North American Electric Reliability Corporation.
Utility Companies Push Back Against Oversight of Their EEI Dues
When third-party organizations or public service commission staffs have attempted to protect
ratepayers from funding political organizations in recent years, their attempts have met with
fierce resistance from the utility companies. Nevertheless, some auditors at public utility
commissions and some consumer advocates either have successfully asked that the burden
of proof be placed on a utility company to show how EEI dues benefit ratepayers, or have
asked for more financial information regarding EEI’s spending in attempts to show
commissioners that EEI’s spending is intended to benefit shareholders.
Waning Regulatory Oversight of Ratepayers’ Paying for Political Memberships
For a time between the 1980’s and early 2000’s, the National Association of Regulatory Utility
Commissioners (NARUC) investigated EEI’s misuse of utility customer money for lobbying
and public relations. This led to NARUC conducting annual audits of EEI’s financial records.7
The result was a system of compromise where, based on NARUC’s annual audits, regulators
ruled that utilities could collect a significantly smaller portion of their EEI dues from
ratepayers. For example, the Florida Public Service Commission increased the lobbying
portion of EEI dues that utilities were not allowed to recover from ratepayers from 2% in 1982
to roughly 33% in 1984.8 The commission also barred utilities from charging ratepayers for
payments to EEI’s “Media Communications Program.”
Over a decade ago, the NARUC audits stopped and consumer advocates have since had
difficulty in fully understanding how EEI spends ratepayer money. In 2013, however, The
Utility Reform Network had success getting 43.3% of the EEI dues paid by Pacific Gas &
Electric’ shareholders during that utility's rate request and not ratepayers as the utility
originally requested.9 Successful oversight of EEI dues has faded away in other states. The
independent review of industry association dues that was once provided by NARUC has

New York Times, “Utility Group Criticized on Funds for Lobbying” available at http://www.nytimes.com/1984/07/21/business/utility-groupcriticized-on-funds-for-lobbying.html
7

Florida Public Service Commission Order (No. 10306, 1981) available at https://www.documentcloud.org/documents/3141815-FloridaPublic-Service-Orders-on-Industry.html#document/p27/a322247; (No. 13537, 1984) available at https://www.documentcloud.org/
documents/3141815-Florida-Public-Service-Orders-on-Industry.html#document/p158/a327132
8

Proposed Decision before the Public Utilities Commission of the State of California (Docket 14-08-032) available at https://
www.documentcloud.org/documents/3239245-COMPENSATION-to-TURN-for-SUBSTANTIAL.html#document/p8/a331970
9

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 been replaced by an unreliable system of self-reporting by EEI and its utility members, both
of whom have an obvious self-interest in maximizing the amount of their dues that will be paid
by ratepayers.
Recommendations
Precedent exists for public officials to determine the percentage of EEI’s work that is
benefiting ratepayers or utility company shareholders. The following recommendations would
help protect ratepayers from funding utilities’ political association memberships:
1. Public utility commissioners and their staff should place the burden of proof on utilities to
demonstrate the exact percentage of customer money provided to industry groups and
other political organizations, including EEI, that benefits their own ratepayers. This is not a
recommendation for commissioners to indiscriminately disallow all EEI dues, as certain
EEI programs such as storm response coordination may indeed benefit ratepayers.
However, utilities should have to disclose the exact benefits that their political industry
associations confer to ratepayers for each of their activities in detail. It is insufficient for
utilities to only file an annual invoice from an organization that notes the self-determined
lobbying percentage as guidance for commissions to determine the appropriate amount
charged to ratepayers.
2. Consumer advocates and other parties whose mission is to protect ratepayers, such as
attorneys general, should file for discovery in order to receive additional documents to
have a better understanding of how a utility company works with their trade associations,
and whether that work benefits ratepayers.
3. The National Association of Regulatory Utility Commissioners (NARUC) should revive the
Committee on Utility Association Oversight and audit EEI, NEI, and AGA to determine the
percentage of their operations which are political in nature and therefore ought not to be
funded by ratepayers.
4. NARUC should compile a survey that shows the percentages of dues utility ratepayers
are paying to industry organizations and political party focused groups; particularly
(though not limited to) EEI; American Gas Association (AGA); Nuclear Energy Institute
(NEI); U.S. Chamber of Commerce; Democratic Governors Association; and Republican
Governors Association. Once completed and then published, this manual can help utility
accounting staff across the country manage the challenges associated with determining
industry association dues during rate requests. This report reveals only examples and is
not exhaustive.

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 I. EEI’s Revenue, Expenses, Actions - and Why Ratepayers
Shouldn’t Be Paying for It
Regulated utilities are subject to federal and state rules that are supposed to protect
ratepayers from paying for efforts to influence policy and legislation, either by the utilities or
their trade associations. However, independent and regulatory oversight of EEI’s budget and
activities has declined over time and it’s worth renewing the question of what exactly
ratepayers are paying for when they fund EEI’s political and public relations machine.

The latest IRS Form 990 filed by EEI reveals that the trade association received a total of $90
million in revenue and spent that amount as well.10 Membership dues comprise $74 million of
EEI’s revenue, or 82%, the highest percentage since 2004, which suggests that the amount
of EEI dues utility companies recover from their ratepayers has also grown over the past
decade. For example, invoices from EEI to Oklahoma Gas and Electric Energy Company that
were submitted to the Arkansas Public Service Commission reveal member dues increasing
every year from 2011 to 2016 - a total of 26% over that timespan.11 Additionally, Florida
10

Edison Electric Institute 2015 Form 990 available at https://www.documentcloud.org/documents/3226570-2015-EEI-990.html

Edison Electric Institute invoices to OGE Energy Corp available at https://www.documentcloud.org/documents/3380957-OGEEnergy-2011-to-2016-EEI-Dues.html
11

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 Power & Light recovered about $1,450,000 in annual EEI dues from ratepayers in 2008 and
is on track to recover more than $2,450,000 in 2018 - a million dollar annual increase.12
With the increase in revenue, EEI’s expenditures have grown. Salaries and benefits for
employees at the trade association make up $40 million, 44% of all expenses, and up from
$30 million in 2008. The uptick in salary expenditures could be the result of an increase in
executive salaries.

The most recent notable executive hire is former Federal Energy Regulatory Commissioner
(FERC) Philip Moeller as a senior vice president. Because Moeller was hired at the beginning
of 2016, his salary is not listed in the latest 990.13 President Thomas Kuhn made $4.1 million
in 2015, up from $1.2 million in 2004, and is ranked among the nation’s highest paid industry
association executives.14 David Owens, the executive vice president for business operations
and regulatory affairs who recently retired, and Brian Wolff, executive vice president for public

Florida Power & Light New Operating Income Schedules and Cost of Capital Schedules (Docket No. 080677-EI) available at http://
www.psc.state.fl.us/library/filings/09/02333-09/02333-09.pdf; Florida Power & Light Industry Association Dues (MFR C-15 draft) available at
https://drive.google.com/file/d/0B-0ZwtRThY3LVjRjSVVPTjZ6N28/view
12

Edison Electric Institute, “Phil Moeller Joins EEI as Senior Vice President” available at http://www.prnewswire.com/news-releases/philmoeller-joins-eei-as-senior-vice-president-300200725.html
13

CEO Update, “Inside Compensation: CEO salaries at large associations 2016” available at https://www.ceoupdate.com/articles/
compensation/inside-compensation-ceo-salaries-large-associations-2016-top-paid
14

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 policy and external affairs, made $1.5 and $1.2 million in 2015, respectively, each having
received a raise of over $300,000 since 2010.15
As a registered 501(c)(6) business league, EEI must detail on its annual IRS Form 990 its
highest paid consultants, expenses for travel, meetings and conferences, and contributions to
other organizations including Section 527 political groups such as the Democratic Governors
Association or the Republican Attorneys General Association. Also because it is a 501(c)(6),
EEI must report an annual aggregate amount of lobbying and political expenditures, which is
all nondeductible, and notify all members of the nondeductible portion of those dues.16 During
rate cases, utilities sometimes produce EEI invoices that self-report the portion of their
payments for dues and various programs that go toward the nondeductible portion of
lobbying and political expenditures. At the beginning of 2015, for example, EEI told member
companies that it estimated lobbying expenses for the year to be only 13% of membership
dues and 25% for a significantly smaller requested amount of money that went toward an
“Industry Issues” line item separate from general dues.17 Usually this sort of disclosure occurs
when a utility is required by another party in the case to provide evidence that it is not
charging ratepayers for EEI’s lobbying. In other cases, utilities are not required to provide
even this minimal form of transparency, which puts their ratepayers at risk of being charged
for lobbying as EEI itself defines it to the IRS.18 Nevertheless, the data on the 990s reveal
that from 2004 through 2015 EEI expensed a total of $130.6 million for nondeductible
lobbying and political expenditures, which is an average of just 14% of its total expenses
during that time period ($909.8 million), and an average of 17% of total dues from its
members ($759.4 million).
However, EEI engages in and incurs expenses for a host of other political activities that are
beyond the set of costs that are categorized as nondeductible section 162(e) dues. In fact, as
detailed later in the report, the National Association of Regulatory Utility Commissioners had
been auditing EEI data until the early-2000s. One of the final audits from NARUC revealed
that 50% of EEI’s expenditures went to the following categories: legislative advocacy;
regulatory advocacy; advertising; marketing; public relations; legislative policy research;
regulatory policy research. All of these are expenditures that should not be paid for by
customers.

15

Edison Electric Institute 2010 Form 990 available at https://www.documentcloud.org/documents/1375241-2010-eei-990.html

16

IRS, “Nondeductible Lobbying and Political Expenditures” available at https://www.irs.gov/pub/irs-tege/notice_1333.pdf

Northern Indiana Public Service Company, Edison Electric Institute Dues, (MSFR1-5-8(a)(2)(A) available at https://
www.documentcloud.org/documents/3111262-Northern-Indiana-Public-Service-Company-Invoices.html#document/p204/a318825
17

Appalachian Power Company and Wheeling Power Company Cost of Service (CAD 1 J-03) available at https://www.documentcloud.org/
documents/3224308-Appalachian-Power-AEP-Membership-Dues.html#document/p42/a330971
18

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 Despite the relatively small amounts documented as “political expenditures and lobbying” in
its 990, EEI annual reports provided to members boast of the “results” the trade association
says it achieved, almost all of which appear entirely political in nature. The objectives include
working to increase utilities’ returns on equity, providing more venues for lobbyists to gain
access to regulators, weakening EPA regulations under the Clean Air and Water Acts, and
undermining policies supportive of distributed renewable energy resources, among other
explicitly political endeavors. In fact, documents handed out at the 2016 annual EEI CEO
meeting revealed some of the specifics of what the trade association tells its members it has
achieved in 2015 and its goals for 2016.19 The objectives include reforming electric rates and
advocacy for increased fixed and demand charges, while other priorities deal with EPA
regulations, tax issues, litigation efforts, and outreach activities to “minority and community
organizations.” Some of these expenses might fall under what EEI self-reports as lobbying to
its members, but many of them likely would not.

More examples of EEI’s achievements from internal documents
•

•

“EEI engaged in extensive advocacy and outreach to EPA and other stakeholders
throughout EPA’s Clean Power Plan rulemaking” that included a “phase-in of emission
reductions over the entire length of the program … two-year delay in implementation …
ability for states to shape their own glide paths … and a less stringent standard for new
coal-based units.”
EEI continued its “multi-state effort and in coordination with member companies” to
increase fixed charges and roll back net metering. Among the efforts, EEI:
• “Engaged with state policymakers, consumer advocates, and other key stakeholders”
• “Rebalanced the public conversation through extensive earned media efforts at the
national and state levels”
• “Convened member companies, state policymakers, and consumer advocates through
the Critical Consumer Issues Forum to develop consensus principles on the evolving
distribution system”
• “Deployed a team of EEI and third-party experts to engage in state proceedings,
forums, earned media, policy conversations, and earned media”
• “Partnered with First Solar and The Brattle Group to conduct and promote a study
highlighting the economic and environmental benefits of utility-scale solar compared to
rooftop solar”
• “Focused on increasing awareness of consumer education and protection issues”

Edison Electric Institute 2015 Results In Review available at http://big.assets.huffingtonpost.com/eeibooklet.pdf; 2016 EEI Corporate
Goals available at http://big.assets.huffingtonpost.com/eeigoal.pdf
19

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 “Advocated for a reduction in aggregate rate subsidies to DG solar and for residential
rate reform to encourage rate designs that are based on cost-of-service”
“Advocated that any new ozone standard” be at the “top range” of the proposal from EPA
“Participated in Supreme Court litigation to help clarify the line between federal and state
jurisdiction over electric rate matters”
“Through We Stand For Energy, EEI continues to educate and unite more than 250,000
electricity consumers and stakeholders across the country and to advocate for smart
energy solutions that ensure electricity remains safe, reliable, affordable, and increasingly
clean”
“EEI continued to educate lawmakers about industry priorities for comprehensive tax
reform, including normalization, the treatment of excess deferred taxes, corporate and
dividend tax rates, the phase-down of subsidies, and the deductibility of interest on
corporate debt”
“EEI successfully advocated for the inclusion of several end-user protections in the Housepassed version of the Commodity Exchange Act reauthorization bill and continued to
educate the Senate on these issues”
“EEI supported provisions” in the House passed broad energy bill, including language that:
• “Make incremental reforms to the federal permitting and licensing process for natural
gas pipelines and hydro facilities”
• “Repeal the ban on the use of fossil-fueled energy in federal buildings”
“EEI’s PowerPAC continues to create opportunities to educate members of Congress on
key industry issues. In 2015, PowerPAC hosted or co-hosted more than 120 political events
for federal elected officials and candidates, and raised more than $2 million for their
campaigns”
“Engaged in congressional efforts to require the EPA and the Army Corps of Engineers to
withdraw, narrow, and re-propose the final waters of the U.S. rule. EEI also supported
UWAG participation in litigation over the rule”
“EEI provided support to Western Electricity Coordinating Council stakeholders for
developing a contract-based funding mechanism for Peak Reliability, which was approved
in June”
“EEI educated NARUC on key industry issues, and conducted educational dialogues for
state regulators with Northwestern, Tulane, and New Mexico State Universities”
“EEI’s ongoing Wall Street/Regulator Dialogues educated regulators and consumer
advocates on key industry issues, including capital expenditures that highlight record-high
investments in the grid”
“EEI-sponsored dialogues and forums brought together FERC commissioners, state
policymakers, consumers, Wall Street analysts, and industry leaders to discuss key issues
facing the industry”
•

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•

•
•

•

•
•
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•
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•
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“EEI established new strategic partnerships with key state- and community-based
organizations to further educate stakeholders and elected officials on the value of the grid
and other industry and consumer priorities”
“Launch of a national education and advocacy strategic initiative to highlight the industry’s
transformative leadership and to create a heightened awareness of and appreciation for
member company initiatives”
Develop “industry positions on the regulatory treatment of energy storage”
“Expand collaboration and outreach to achieve enhanced support for utility-sponsored
programs, products, and services on both sides of the meter”
“Continued advocacy at the CFTC and Congress that builds on efforts to reduce the
regulatory burden of the Dodd Frank Act on derivative end users”
“Ongoing focus on wholesale energy market price formation issues”
“Continued advocacy for industry priorities in comprehensive tax reform”
“Continued work with Congress and the IRS related to the implementation of the Cadillac
Tax”
“Ongoing advocacy for compensatory returns on equity”
Engage FERC with regards to PURPA implementation
“Continued Growth and effective use of We Stand For Energy”
“Development of a 2016 Political Party Convention Program and voter education effort”
“Expand outreach to regional and state forums, minority and community organizations,
regulatory staffs, and academic institutions”

Additionally, a recent filing by NV Energy details the years 2012 and 2013 accomplishments
that EEI achieved for its members, and what it was hoping to attain and spend time pursuing
during those years20 :
• “Through the multi-faceted Defend My Dividend campaign, secured permanent parity
between the tax rates for dividends and capital gains”
• “Advocated that coal ash be regulated as non-hazardous”
• “Secured favorable pension funding stabilization provision in legislation”
• “Secured a FERC policy statement that continues the favorable incentives policy for
qualifying transmission projects, including ROE adders”
• “Continued outreach to state-level policymakers and consumers through the Critical
Consumers Issues Forum and other forums”
• “EEI continues to advocate for equitable distributed generation and net metering policies
that end cost shifting and ensure all electricity customers pay their fair share toward the
cost of the grid. Among our efforts, EEI:

NV Energy Response to Data Requests, Public Utilities Commission of Nevada, available at https://www.documentcloud.org/documents/
3242975-NV-Energy-Dues-with-EEI-Letter-to-CEOs.html#document/p7/a332460
20

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 “Launched a multi-faceted industry-wide campaign calling for net metering updates in
the states”
• “Conducted national public opinion research and polling to guide messaging and
collateral development”
• “Published A Policy Framework for Designing Distributed Generation Tariffs to
advocate for appropriate DG resources”
• “Commissioned third-party studies and assembled experts to engage in state
proceedings/forums”
• “Worked to educate member companies and key constituents through Webinars,
meetings, and forums”
• “Released, through IEE, an issue brief: The Value of the Grid to DG Customers”
• “Convened three regional summits and participated in the Critical Consumer Issues
Forum consisting of state commissioners, consumer advocates, and EEI member
companies”
• “Created a members-only Internet workroom and online toolkit of research and
advocacy resources”
• “Worked to secure favorable resolutions or statements from several national and state
policy organizations”
“EEI is educating lawmakers about industry priorities for comprehensive tax reform,
including normalization, the treatment of excess deferred taxes, corporate and dividend tax
rates, and the deductibility of interest on corporate debt”
“Through a new white paper and outreach to FERC, NARUC, and the media, EEI is
seeking compensatory returns on equity (ROEs) that reflect the risks of development and
the long asset life of transmission facilities”
“EEI continues to deploy its smart grid third-party experts to assist member companies in
addressing data privacy, radio frequency, and opt-out issues”
“EEI’s ongoing Wall Street regulatory dialogues educated regulators and consumer
advocates on DG and net metering issues, as well as the importance of full rate recovery
and reasonable ROEs to support the capital expenditures involved in the build-out of utility
infrastructure and environmental compliance”
“In support of APS, achieved a fixed charge for rooftop solar customers in Arizona to
support the grid”
“EEI led the development of industry comments on EPA’s proposed effluent limitations
guidelines rule, advocating for flexibility and the use of cost-effective and feasible
technologies”
“EEI hosted an October External Affairs Conference for member company federal, state,
and local government affairs representatives to discuss advocacy tools and strategies”
“EEI educated NARUC on key industry issues; this outreach culminated in several positive
resolutions”
•

•

•

•

•

•

•

•

•

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•

“Fundamental corporate tax reform, including the treatment of normalization, excess
deferred taxes, deductibility of debt interest, and corporate and dividend tax rates”
“Regulatory pushback on authorized returns and CAPEX programs”

Many of the industry’s achievements are results of EEI staff doing work that is not technically
considered nondeductible, but is certainly political in nature by any reasonable definition.
Furthermore, the intended benefit of these actions is to benefit the shareholders of its
members and to assist members with their own efforts to benefit shareholders. In fact, when
EEI began its multi-state effort and coordination with member companies to address declining
sales and the increase usage of distributed generation, it is clear that its members leapt into
action. EEI gave a presentation to member CEOs in 2012 regarding the threats to the
industry’s earnings, and what groups to target to achieve favorable policies.21 Then in 2013,
EEI released a report that said threats to the business model can be “partially addressed” by
implementing fixed or demand charges.22 Utility companies have subsequently filed requests
to increase fixed charges and implement demand charges at alarming rates, despite the fact
that these charges harm low-income ratepayers.23 The latest data, compiled by the N.C.
Clean Energy Technology Center, shows that in 2016, utilities made 71 requests in 35 states
plus D.C. to increase fixed charges on all residential ratepayers by at least 10%.24
In addition to its political activities, EEI funds domestic organizations, consultants, and
lawyers that are also conducting work that benefits utility company shareholders. Consistent
beneficiaries of EEI money over the years have been Hunton & Williams LLP and Venable
LLP. Hunton & Williams is the counsel for the Utility Air Regulatory Group (UARG), Utility
Water Act Group (UWAG), and Waters Advocacy Coalition (WAC). Venable represents the
Utilities Solid Waste and Activities Group (USWAG). Since 2008, Hunton & Williams has
received $64.7 million from EEI and Venable has received $21.5 million.
In a comment to the EPA, UARG described itself as a “not-for-profit association of individual
electric generating companies and national trade associations that participate on behalf of its
members collectively in administrative proceedings under the Clean Air Act (“CAA”), and in
Washington Post, “Utilities wage campaign against rooftop solar” available at https://www.washingtonpost.com/national/health-science/
utilities-sensing-threat-put-squeeze-on-booming-solar-roof-industry/2015/03/07/2d916f88-c1c9-11e4-ad5c-3b8ce89f1b89_story.html?
utm_term=.4e1f3778a566
21

22

Edison Electric Institute, “Disruptive Challenges” available at http://www.eei.org/ourissues/finance/documents/disruptivechallenges.pdf

Synapse Energy Economy, “Caught in a Fix” available at http://consumersunion.org/wp-content/uploads/2016/02/Caught-in-a-FixFINAL-REPORT-20160208-2.pdf
23

NC Clean Energy Technology Center, “The 50 States of Solar Report: 2016 Annual Review and Q4 Update” available at https://
nccleantech.ncsu.edu/the-50-states-of-solar-report-2016-annual-review-and-q4-update/
24

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 litigation arising from those proceedings, that affect electric generators.”25 However, UARG
does not have a website and it is not clear what this organization does besides lobbying the
EPA, suing the EPA or researching and preparing for suits against the EPA. UARG rejects
inquiries about its membership and operation activity from the media.
USWAG does have a website. It describes itself as “the trade association of over 110 utility
operating companies, energy companies and industry associations, including the Edison
Electric Institute, the National Rural Electric Cooperative Association, the American Public
Power Association, and the American Gas Association.”26 Its stated mission is to engage in
regulatory advocacy pertaining to the Resource Conservation and Recovery Act, Toxic
Substances Control Act, and Hazardous Materials Transportation Act.
An examination of UARG, UWAG, WAC, and USWAG actions reveals that these collective
bodies were involved with rules to reduce mercury, pollution affecting regional haze, and
carbon dioxide, the Clean Water Act, and EPA’s classification that coal ash is non-hazardous.
A 2015 letter from EEI to member CEOs stated that only 6.2% of USWAG expenditures was
used to influence legislation for the 2014 calendar year while 68.8% of WAC expenses was
devoted to nondeductible actions. The EEI letter did not detail any UARG or UWAG
expenditures.27 Yet, Northern Indiana Public Service Company (NIPSCO) adjusted all
2014-2015 UARG payments through their EEI dues to reflect that they were used for lobbying
purposes.28 The decision by NIPSCO follows an adjustment by Tucson Electric Power (TEP)
from 2008 when it also noted that 100% of UARG dues were devoted to nondeductible
activities. The Arizona Corporation Commission staff recommended that these expenditures
not be borne by ratepayers.29 However, in November 2016, Kentucky Utilities Company
allocated $148,785 for “EEI UARG” as a general expense to be paid for by its ratepayers, as
did Wisconsin Electric Power Company for its 2015 UARG dues through EEI.30
Comment submitted by Lucinda Minton Langworthy, Counsel, Hunton & Williams on behalf of the Utility Air Regulatory Group, available
at https://www.regulations.gov/document?D=EPA-HQ-OAR-2013-0572-0161
25

26

About USWAG, available at http://www.uswag.org/About/Pages/default.aspx

Edison Electric Institute March 15, 2015 letter available at https://www.documentcloud.org/documents/3244482-Centerpoint-EnergyDues.html#document/p35/a332623
27

Northern Indiana Public Service Company Edison Electric Institute Dues, (No.44688) available at https://www.documentcloud.org/
documents/3111258-Northern-Indiana-Public-Service-Company-Dues.html#document/p107/a331762
28

Arizona Corporation Commission Application of Tucson Electric Power Company (No.E-01933A-07-0402) available at https://
www.documentcloud.org/documents/3284782-ACC-Transcript-EEI-Dues-2008.html#document/p117/a334770.
29

Kentucky Utilities Company Miscellaneous General Expenses (No.2016-00370) available at https://www.documentcloud.org/documents/
3284802-Kentucky-Utilities-Company-Rate-Request-Response.html#document/p566/a334597; Wisconsin Electric Power Company
Industry Association Dues available at https://www.documentcloud.org/documents/3290885-Wisconisn-Electric-PowerCompany-2012-2013-2015.html.
30

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 Besides Hunton & Williams and Venable, some of the largest and some of the most
controversial recipients of EEI money over the years include:
Sample of EEI’s Contributions to Consultants and Organizations (2008-2015)
Daniel J. Edelman
(Edelman PR)

$1,774,305

American Legislative
Exchange Council

$142,667

NetCommunications

$750,599

National Conference of
State Legislators

$125,931

Thomas Alva Edison
Foundation

$630,604

Third Way

$100,000

Republican State
Leadership Committee

$255,000

Americans For Tax Reform

$75,000

Democratic Governors
Association

$205,000

National Black Chamber of
Commerce

$25,000

National Labor and
Management Public Affairs
Committee

$185,400

State Policy Network

$10,000

Congressional Black
Caucus/Foundation

$185,400

Committee for a
Constructive Tomorrow

$8,000

U.S. Chamber of
Commerce

$180,050

Americans For Prosperity

$7,500

Several of the groups listed in the table are controversial because of their work to influence
decision makers and the public. For instance, the Republican State Leadership Committee
uses its resources to get more Republicans elected to state legislatures and utility
commissions, while the Democratic Governors Association is dedicated to helping Democrats
win gubernatorial races. These contributions are likely considered nondeductible, but
donations to 501(c)(3) groups are likely getting expensed by ratepayers through their utilities.
The American Legislative Exchange Council (ALEC), a 501(c)(3), provides state legislators
with so called “model policies” used in attempts to roll-back state laws requiring utilities to
increase their use of renewable energy and reduce their carbon dioxide emissions.31 EEI has
continued to fund ALEC even as some of its member utilities have quit over ALEC’s
controversial attacks on clean energy policies. Meanwhile, the National Black Chamber of
Commerce President and CEO Harry Alford, another (c)(3) group, regularly testifies or writes

Mother Jones, “ALEC’s Campaign Against Renewable Energy,” available at http://www.motherjones.com/environment/2013/12/alec-callspenalties-freerider-homeowners-assault-clean-energy; PBS Newshour, “Has Exxon Mobil misled the public about its climate change
research?” available at http://www.pbs.org/newshour/bb/exxon-mobil-mislead-public-climate-change-research/
31

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 columns advocating against environmental regulations, and Americans For Prosperity
actively runs political campaigns to build opposition against climate change and renewable
energy legislation.32
Some of EEI’s contributions fund conference sponsorship, which helps EEI buy influence and
access to decision makers or to organizations that can sway decision makers. In fact, audio
released in March 2017 revealed EEI’s director of external affairs, Todd Wynn, speaking on a
panel at the State Policy Network conference, another (c)(3), enlisting third-parties to help the
industry implement more fixed charges.33 These conferences and events are also
opportunities for EEI to make sure its objectives are achieved. Emails between EEI and New
Mexico State University Center for Public Utilities reveal that EEI’s Elizabeth Stipnieks,
director of regulatory relations, helped choose speakers and the agenda for conferences
attended by regulators and agency staffers.34
In April 2016, documents surfaced showing that EEI had hired a public relations/crisis
communications firm, Maslansky + Partners (also listed as an EEI Associate Member) to
rebrand the electric utility industry and overcome the negative perceptions consumers have
about the lack of progress utilities have made on renewable energy and environmental
issues.35 Thomas Fanning, the CEO of Southern Company and chairman of EEI, hailed the
resulting “Lexicon Project” as an opportunity for utilities to assume an “offensive posture” on
energy policy.36 A presentation and discussion occurred at the January 2016 CEO Board
Meeting in Arizona. This event is an example of a public relations expense that is aimed
primarily at helping member companies achieve their political goals at all levels of
government, and simultaneously counter the negative publicity that occurs when companies
file for rate increases or propose new fees.
Utilities are already incorporating the recommendations that Maslansky + Partners made to
the CEOs into company statements in an effort to change the public’s attitude; one element of
the Lexicon advised rebranding utility-scale solar as “universal solar.” Rooftop solar would be
Congressional Hearing “Reality Check: The Impact and Achievability on EPA’s Proposed Ozone Standard” Presented by Harry Alford
available at http://docs.house.gov/meetings/SY/SY00/20150317/103159/HHRG-114-SY00-Wstate-AlfordH-20150317.pdf; Environment
America, “Blocking the Sun” available at http://www.environmentamerica.org/reports/ame/blocking-sun
32

UtilitySecrets “Audio: Edison Electric Institute Director of External Affairs Enlists Third-Parties To Help Attack Rooftop Solar” available at
http://www.utilitysecrets.org/edison-electric-institute-state-policy-network-attack-rooftop-solar/
33

Energy and Policy Institute, New Mexico State University Center for Public Utilities, available at http://www.energyandpolicy.org/utilityindustry-influence-at-universities/new-mexico-state-university-center-for-public-utilities/
34

Huffington Post, “This Messaging Guru Is Helping Utilities Clean Up Their Appearance” available at http://www.huffingtonpost.com/
entry/messaging-utilities-solar-power_us_56f45cd6e4b014d3fe22b572
35

E&E News “Southern’s Fanning sees his industry driving U.S. economic success” available at http://www.eenews.net/stories/
1060040248
36

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 reframed with the term “private solar.” The new vocabulary is trickling into EEI member
utilities’ statements:
• Eric Silagy, president and CEO of Florida Power & Light, used the term “private solar”
when endorsing a controversial ballot initiative in Florida, which would have opened the
door to rolling back net metering incentives for rooftop solar if it had passed.37
• American Electric Power Chairman, President and CEO, Nick Akins, used the term
“universal solar” in an interview; AEP has also staked out a position that “large-scale
universal solar is a better alternative to private solar.”38
• Public Service Electric and Gas Renewables and Energy Solutions Vice-President
Courtney McCormick, used the term “universal solar” in an article about the utility
constructing 33 megawatts of solar over the next three years;39
• Rocky Mountain Power External Communications Director, Paul Murphy, used the term
“universal solar” in a letter to the editor about how the company embraces solar energy.40
All of these examples demonstrate the need for more oversight in order to better understand
whether or not the portion of utilities’ payments to EEI that are ultimately paid by ratepayers
are used to pay for political and public relations activities that provide no clear customer
benefit.

II. Utility Companies Charging Ratepayers for EEI Dues
Each state utility commission determines whether ratepayers or shareholders should pay for
membership dues differently, and each utility, including utilities in the same state, follows
different procedures for reporting.

Florida Politics, “Eric Silagy: Florida Power & Light endorses solar amendments; urges optimism about clean energy in Florida” available
at http://floridapolitics.com/archives/220533-eric-silagy-florida-power-light-endorses-solar-amendments-highlights-floridas-clean-energyprogress
37

The Columbus Dispatch, “AEP wants to lead Oho solar-power development” available at http://www.dispatch.com/content/stories/
business/2016/04/26/aep-wants-to-lead-ohio-solar-power-development.html; AEP Universal Solar available at https://
www.aepsustainability.com/business/innovation/solar.aspx
38

Power-Technology “PSE&G receives approval from NK BPU to extend Solar 4 All program” available at http://www.powertechnology.com/news/newspseg-gets-approval-from-nk-bpu-to-extend-solar-4-all-programme-5685927
39

The Salt Lake Tribune, “Letter: Rocky Mountain Power moves ahead on solar power” available at http://www.sltrib.com/opinion/
4248822-155/letter-rocky-mountain-power-moves-ahead
40

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 For instance, a document filed by Southern Company’s subsidiary Georgia Power details its
2016 dues to EEI.41 The filing reveals that the amounts that are coded to “426.4” and “930.2.”
The codes are from the Federal Energy Regulatory Commission (FERC) accounting code.
The appendix of this report explains in more detail the different FERC codes. In short, 426.4
is used for expenditures that are for lobbying and influencing public opinion and public
officials. These amounts should be charged to shareholders. Account 930.2 is used for
miscellaneous general expenses and typically includes industry association dues. Amounts
coded to 930.2 are generally charged to ratepayers. In this instance, Georgia Power
proposed $698,521 of EEI dues to be charged to its ratepayers, and $290,481 to
shareholders - a 71% to 29% split.

A document filed in March 2016 by a public utility auditor for the Oklahoma Corporation
Commission (OCC) shows the EEI dues Oklahoma Gas and Electric proposed to have its
ratepayers in Oklahoma pay: $670,609.42 The OCC auditor appears to have allowed 100% of
that amount.

Georgia Power Company Allocation of EEI Dues available at https://www.documentcloud.org/documents/3237843-Georgia-Power-Duesto-Edison-Electric-Institute.html#document/p7/a331581
41

Oklahoma Gas and Electric Disallowance in Civic Dues & Community Activities Expenses available at https://www.documentcloud.org/
documents/3111578-Sharhonda-Dodoo-PUD-Testimony-OGE-Dues.html#document/p6/a318911
42

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 Similarly, a Florida Power & Light spreadsheet submitted to the PSC shows the utility charged
$2,290,051 for its EEI expenses under FERC “930” in 2015.43 FPL also refers to its policy of
recording expenses for lobbying, civic, political and related activities as “below the line”
expenses, which means it is claiming that those expenses should be charged to
shareholders. Because FPL does not disclose these expenses, the claim is impossible to
verify.
Madison Gas & Electric (MGE) summarizes all of the association dues and corporate
memberships by amount and FERC code. MGE asks for half of the total EEI dues for test
year 2017 to be recovered in rates.44 It appears the 50% charge to shareholders is a result of
a 1985 decision that required the utilities to include only 50% of EEI dues in the test year
income statement.45 The memo also details what should be allocated for the American Gas
Association and EEI’s “U Groups.”

Florida Power & Light Rate Case Industry Association Dues available at https://drive.google.com/file/d/
0B-0ZwtRThY3LVjRjSVVPTjZ6N28/view
43

Madison Gas and Electric Company Detail Summary of All Industrial Association Dues, Corporate Memberships available at https://
www.documentcloud.org/documents/3100475-Madison-Gas-and-Electric-Industrial-Association.html
44

Public Service Commission of Wisconsin Departmental Correspondence available at https://www.documentcloud.org/documents/
3459194-1985-Wisconsin-PSC-Memo-Association-Dues.html
45

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 However, Wisconsin Electric Power Company recently proposed to charge $728,712 to EEI
(along with $223,804 to EEI for the Utility Air Regulatory Group) to its ratepayers, and

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 allocated only $217,668 of the total amount to EEI, 22.8%, to FERC Account 426.46 The filing
also shows a 30% increase of dues to EEI from 2012 to 2015 at the expense of Wisconsin
Electric Power Company ratepayers.

In other dockets, utilities do not make clear what FERC accounts they are using for their
trade association dues, such as in CenterPoint Energy’s 2014 request of $606,847 for EEI.47

Wisconsin Electric Power Company Industry Association Dues available at https://www.documentcloud.org/documents/3290885Wisconisn-Electric-Power-Company-2012-2013-2015.html#document/p1/a334773
46

CenterPoint Energy Houston Electric Charitable Contributions and Donations available at https://www.documentcloud.org/documents/
3244482-Centerpoint-Energy-Dues.html
47

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 Filings by Indianapolis Power & Light and NV Energy reveal the total amount sent to EEI from
the utility holding companies AES Corporation and Berkshire Hathaway Energy. The
documents reveal the percentages the utility subsidiaries add to their operating expenses. In
2015, NV Energy’s EEI dues were $661,673, of which 84% ($556,593) was allocated in
FERC account 930 for ratepayers to pay. A total of $2.28 million was billed to Berkshire
Hathaway Corporation by EEI.48

In 2014, the total invoice to AES Corporation was $1.077 million. The filing shows that AES
removed 22% of EEI dues as legislative and charitable contributions, and then allocated
31.9% of the remaining funds to its Indiana subsidiary.49

Sierra Pacific Power Company Edison Electric Institute dues available at https://www.documentcloud.org/documents/3235953-NVEnergy-Dues.html#document/p140/a331435
48

Indianapolis Power & Light Edison Electric and Indiana Energy Association Dues available at https://www.documentcloud.org/
documents/3100472-Indianapolis-Power-and-Light-Industry.html#document/p46/a318422
49

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 In summary, utilities routinely recovery the majority of their EEI membership dues and
program payments from ratepayers, even though EEI documents demonstrate that the
organization’s work is inherently political. The evidence warrants a thorough and independent
review of EEI’s budget and expenditures to ensure that ratepayers are not funding the utility
industry’s political agenda.

III. Other Political Organizations Receiving Ratepayer Money
Beyond EEI, utilities are charging ratepayers for their memberships in other inherently
political organizations:
• Dominion and Duke Energy attempted to have ratepayers subsidize a portion of
American Legislative Exchange Council dues and political party organizations in rate
requests.

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 •
•

•

•

•

Wisconsin Public Service also included political party organizations in a rate request.
American Electric Power subsidiaries requested that ratepayers fund the American
Coalition for Clean Coal Electricity and the Emerging Issues Policy Forum.
Florida Power & Light, FirstEnergy, Oklahoma Gas & Electric, and Wisconsin Public
Service added portions of U.S. Chamber of Commerce membership fees and asked for
ratepayers to foot the bill.
Pacific Gas & Electric, Madison Gas and Electric, Southern California Edison, and
Wisconsin Public Service requested ratepayers pay for all or some of their American Gas
Association dues.
Dominion, Duke Energy, and Florida Power & Light requested ratepayers pay for Nuclear
Energy Institute dues.

The FPL spreadsheet in the utility’s rate request revealed that it included $63,000 to the U.S.
Chamber of Commerce and an additional $157,000 earmarked to the U.S. Chamber of
Commerce’s Institute of 21st Century Energy in operating expenses.50 The Chamber, which
has also received EEI money, has been a leading voice against the EPA’s Clean Power Plan
and greenhouse gas emission regulations, ozone and fine particle regulations, vehicle
emission standards, and rooftop solar policies.51 The political powerhouse is also involved in
political debates over health care, tax rates, labor policies, and immigration.

The requests from Madison Gas and Electric and Wisconsin Electric Power Company also
included “AGA,” which is the American Gas Association, a leading voice for continued and
increased use of fracking, and construction of natural gas infrastructure and power plants.
Dominion filed a rate request to the Virginia State Corporation Commission that included
many political organizations, including the American Legislative Exchange Council (ALEC),

50

Florida Power & Light Industry Association Dues available at https://drive.google.com/file/d/0B-0ZwtRThY3LVjRjSVVPTjZ6N28/view

51

Institute for 21st Century Energy Policy Center available at http://www.energyxxi.org/issues

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 while noting what was below-the-line.52 The amounts Dominion requested to be above and
below-the-line defied logical explanation, because nearly all of the amounts to the Democratic
Legislative Campaign Committee were listed below-the-line, while all of the money for the
Republican Governors Association Board Membership was above-the-line. It’s not clear why
Dominion felt ratepayers should fund Republican political organizations but not Democrat
organizations. Virginia Corporation Commission staff noted the incongruence and routed the
ALEC and Republican party organization dues to shareholders.

Meanwhile, in North Carolina, Duke Energy filed requests to also include ALEC along with the
Democratic Governors Association, the National Republican Club of Capitol Hill, and other
political entities to be paid by ratepayers.53 Consumer advocates and utility commission staff
caught the effort. Duke Energy testified that this was an error and said “the filing was
performed by human beings and no human being is perfect.”54

Virginia Electric and Power Company Adjustment to Remove Lobbying available at https://www.documentcloud.org/documents/
3104630-Dominion-Dues-Appendix-B.html#document/p6/a320801
52

Application of Duke Energy Carolinas for Adjustment of Rates, NC WARN testimony available at https://www.documentcloud.org/
documents/3459599-NC-WARN-Testimony-Before-NCUC-2013.html#document/p10/a338017
53

Application of Duke Energy Carolinas for Adjustment of Rates, Duke Energy testimony available at https://www.documentcloud.org/
documents/3459595-Duke-Energy-Testimony-2013-Rate-Request.html#document/p83/a338018
54

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 Wisconsin Public Service included several political party organizations, the U.S. Chamber of
Commerce, and the American Gas Association in Account 930.55

Wisconsin Public Service Corporation Government Relations/Memberships available at https://www.documentcloud.org/documents/
3227546-Wisconsin-Public-Service-Corporation-Dues.html
55

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 Minnesota Power (Allete) included in its corporate dues several pro-coal entities and its
UWAG membership.56

A request filed by Appalachian Power Company and Wheeling Power Company (American
Electric Power companies) reveals money going to many organizations working to increase
the use of coal and prevent EPA regulations, but also the wind energy trade association.57

Minnesota Power Organization Dues available at https://www.documentcloud.org/documents/3224119-Minnesota-Power-AlleteOrganization-Dues.html#document/p518/a329515
56

Appalachian Power Company and Wheeling Power Company response to discovery re questions available at https://
www.documentcloud.org/documents/3224308-Appalachian-Power-AEP-Membership-Dues.html
57

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 While the amounts highlighted in this report pale in comparison to the ratepayer money that
utilities seek to build infrastructure, customers are nevertheless funding political activities
which which they may not agree, and from which they do not benefit.

III. Utility Pushback Against Oversight of Their EEI Dues
Regulatory oversight of requests by utilities to recover EEI dues from ratepayers has lapsed
in many states. For example, longstanding Florida Public Service Commission precedent
requires utilities to provide “adequate segregation” of EEI dues, or commissioners would
disallow the utility from recovering one-third of those dues as lobbying.58 However, FPL
reported in 2016 more than $9.5 million in EEI dues for 2015-2018 as part of its latest rate
request before the Florida PSC. The utility’s request to include its EEI dues went
unchallenged despite a lack of transparency or segregation, and its request was approved.
Many utility companies simply include an annual EEI invoice that footnotes the percentage
EEI deems to be lobbying in the rate request as justification for the amounts charged to
ratepayers and shareholders. That lobbying percentage has often been enough for a
commission staff and commissioners. In fact, several of the utilities that EPI reviewed,
including Dominion, El Paso Electric, Monongahela Power Company and the Potomac
Edison Company, NV Energy, and NIPSCO, either submitted the EEI invoice as evidence or
noted an amount based on percentages that EEI deemed lobbying in Account 426.4.
However, public utility commissions in a number of states have required utilities to provide
evidence that any EEI payments benefit ratepayers. If the utility fails to do so, then
commissioners have disallowed all of EEI dues from general operating expenses. In other
cases, a utility must demonstrate that it has not only disallowed expenditures for lobbying but
also all types political activities such as regulatory or legislative activities - and an EEI invoice
is insufficient. Decision makers have disallowed nearly 50% of EEI dues based on detailed
budget information that had previously been published for decades under guidance provided
by the National Association of Regulatory Utility Commissioners (NARUC). But when
regulatory staff have questioned EEI dues, utilities have been quick to respond and push
back against staff testimony or discovery requests with rebuttals that show EEI invoices and/
or prior precedents to allow for the recovery of EEI dues.

Energy and Policy Institute, “The Real Cost Shift: Utilities Force Customers to Subsidize Attacks on Rooftop Solar” available at http://
www.energyandpolicy.org/real-solar-cost-shift-subsidized-attacks-on-rooftop-solar/
58

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 EEI membership “appears to primarily benefit the Company”
In 2015, Missouri Public Service Commission utility regulatory auditors presented testimony
to support the staff’s proposal to disallow the entire amount of EEI dues in the rate request of
Union Electric Company (Ameren).59 While staff said that the ratepayers may receive some
benefit from Ameren Missouri’s membership in EEI, they noted that “the membership appears
to primarily benefit the Company and its shareholders.” The Minnesota Office of Attorney
General similarly recommended that ratepayers not pay for EEI dues using the same
reasoning: dues should not be recovered because EEI is primarily a lobbying organization.60
Missouri PSC staff cited a previous rate case, No.ER-82-66, that ordered all of Kansas City
Power and Light’s EEI dues in Missouri to be disallowed because the utility has not quantified
the benefit to ratepayers.61 Staff also cited Arkansas Power and Light Case, No.ER-85-265,
in which the PSC “reaffirms its previously stated position that a utility company must properly
assign EEI dues based upon the respective benefit to the ratepayers and the shareholders.”62
Staff further cited Union Electric Company Case No. EC-87-114, in which the commission
stated that it has consistently excluded EEI dues from the cost of service “on the ground that
these payments have not been shown to produce any direct benefit to the ratepayers.”63
Ameren, despite established state precedent, still requested its ratepayers shoulder EEI
contributions of $483,138 along with $235,455 to UARG, $96,010 to UWAG, and $47,163 to
USWAG.64 After negotiations between staff, Ameren, and several signatories, a settlement
was reached to allow the utility to recover $11 million for various revenue issues, including

Surrebuttal Testimony in Union Electric Company d/b/a Ameren Missouri case available at https://www.documentcloud.org/documents/
3320628-MO-PSC-Surrebuttal-Testimony-Dues.html
59

Minnesota Public Utilities Commission Staff Briefing Papers, Otter Tail Power Company GR-15-1033 available at https://
www.documentcloud.org/documents/3675289-Otter-Tail-Power-MN-PUC-Staff-Briefing-Papers.html#document/p71/a351343
60

Report and Order in Kansas City Power & Light Company case available at https://www.documentcloud.org/documents/3461052Missouri-PSC-ER8266-EEI-Dues.html#document/p26/a338197; Surrebutal Testimony in Union Electric Company case available at https://
www.documentcloud.org/documents/3320628-MO-PSC-Surrebuttal-Testimony-Dues.html#document/p4/a334933
61

Surrebuttal Testimony in Arkansas Power and Light case available at https://www.documentcloud.org/documents/3320628-MO-PSCSurrebuttal-Testimony-Dues.html#document/p5/a334932
62

Report and Order in Union Electric Company case available at https://www.documentcloud.org/documents/3461051-Missouri-PSCEC87114-EEI-Dues.html#document/p33/a338198; Surrebuttal Testimony in Union Electric Company case available at https://
www.documentcloud.org/documents/3320628-MO-PSC-Surrebuttal-Testimony-Dues.html#document/p5/a334931
63

Ameren Position of Statement of Dues, Including EEI and Environmental Working Groups Dues available at https://
www.documentcloud.org/documents/3461233-MO-PSC-Statement-of-Positions-EEI-Dues.html#document/p3/a338293
64

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 EEI dues.65 It is unclear from the settlement order what amount Ameren was allowed to
charge its ratepayers.
In the Kansas City Power and Light Greater Missouri Operations Company rate request filed
in December 2015, commission staff once again recommended that all EEI dues be
disallowed. The utility said that it recorded approximately 21% of its dues to EEI below the
line based on the invoice it received from the trade association.66 However, commission staff,
in a filing of limited issues, continued to recommend that the commissioners not force
ratepayers to pay for EEI dues simply because the utility’s membership “does not benefit
ratepayers.”67 The rate case was settled and the issue of EEI dues was not mentioned.
“EEI ceased its earlier practice of issuing detailed information on its budget”
William Marcus, on behalf of the Office of Attorney General, testified in Oklahoma Gas &
Electric’s rate request before the Arkansas PSC in 2009.68 Marcus said that OG&E has used
the itemized invoice that EEI submitted to the utility to note that it is not seeking recovery for
the 20% of Regular Activities and 40% of the fee for industry structure, which are all based on
percentages footnoted on the invoice. However, Marcus recommended that the PSC disallow
a total of 49.93% of the Regular Activities dues for ratemaking purposes as it did in the
Entergy case, docket 06-101-U. Marcus cited the table below to justify its recommendation.
The 49.93% is a result of adding Legislative Advocacy (20.38%), Regulatory Advocacy
(16.49%), Advertising (1.67%), Marketing (3.68%), and Public Relations (7.71%). Marcus did
not advocate for it, but commissioners could go further and disallow both Legislative Policy
Research (6.02%) and Regulatory Policy Research (13.99%), since those categories support
EEI’s advocacy. The table comes from the last available audited data of EEI spending by
NARUC categories, in 2005.

Nonunimous stipulation and agreement regarding certain revenue and requirement issues available at https://www.documentcloud.org/
documents/3519637-Settlement-Between-Ameren-and-PSC-Staff.html
65

KCP&L Greater Missouri Operations Testimony available at https://www.documentcloud.org/documents/3320624-KCPL-RebuttalTestimony-2016-Dues.html#document/p25/a334971
66

Missouri Public Service Commission Staff Positions on Listed Issues available at available at https://www.documentcloud.org/
documents/3324311-MO-PSC-Rebuttal-to-KCPL.html#document/p8/a334973
67

Application of Oklahoma Gas and Electric Corporation, Arkansas Attorney General testimony available at https://
www.documentcloud.org/documents/3239426-Arkansas-AG-Office-2009-OGE-Rate-Request.html#document/p64/a332104
68

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 In Entergy Texas Inc.’s (ETI’s) rate case, the utility filed a motion to strike parts of testimony
given by Marcus that specifically dealt with the NARUC audit and EEI dues. Sheri Givens,
then-attorney for the Texas Office of Public Utility Counsel, filed a defense of Marcus’
testimony. Givens stated (emphasis added):
ETI over-reaches in its claim and its Motion should be denied. First, it is not
speculation that EEI ceased its earlier practice of issuing detailed information on
its budget that have previously been published. This fact is stated on lines 12
through 15 (EEI has decided on its own to stop issuing detailed information on
its budget that had previously been published for decades under the auspices of
NARUC) … These are factual statements backed up by the response of the Kentucky
Utilities Company to a discovery request by the Kentucky Public Service Commission

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 … Kentucky Utilities expressly states, “Beginning in 2007, EEI is no longer preparing
the breakout of activities by NARUC category as provided in the last rate case.” ETI
itself provided a letter from EEI that shows that of the former “breakout categories,”
only legislative advocacy is broken out and that is because it is required by the IRS
because lobbying activities are not tax deductible for its members.69
In other words, Givens stated that because of the fact that EEI no longer provides its member
companies breakouts of spending as defined by NARUC, instead providing only its lobbying
percentages, it is acceptable for commissioners to use the latest audit by NARUC to
understand EEI spending with greater precision.
“EEI spends money on many other things that do not fit the narrow definition of lobbying”
In California, Marcus, on behalf of The Utility Reform Network (TURN) proposed allocating
43.3% of EEI dues below the line rather than the 25% proposed by Pacific Gas & Electric
(PG&E) for the utility’s 2014 general rate case. In testimony, Marcus stated what this report
argues, which is that “EEI spends money on many other things that do not fit the narrow
definition of lobbying. The Commission has in the past specifically rejected all EEI spending
for lobbying, legislative advocacy, regulatory advocacy, marketing, public relations,
advertising, donations, and club dues.”70 TURN cited D. 96-01-011 as precedent.
The testimony further explained that “after a series of regulatory disallowances of significant
parts of EEI dues across the country, EEI has decided on its own to stop issuing detailed
information on its budget that had previously been published for decades under the auspices
of NARUC.” TURN then presented the 2005 audited schedule of expenses defined by
NARUC (page 33 of this report) and another table that shows unaudited EEI expense
categories for 2005 to 2009 obtained from a prior rate case in Arkansas.71

Application of Entergy Texas Inc., Office of Public Utility Counsel response available at https://www.documentcloud.org/documents/
3288545-Texas-PUC-Response-to-Entergy-Texas.html#document/p11/a334904
69

Electric Generation and Other Results of Operations Issues for Pacific Gas and Electric Company, The Utility Reform Network William
Marcus testimony available at https://www.documentcloud.org/documents/3382426-TURN-PGE-Testimony-2014-RateRequest.html#document/p72/a335205
70

71

Ibid.

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 The 43% that TURN proposes is a result of adding - at the time - the latest available
information of Legislative Advocacy and Policy Research (21.9%), Public Relations (2.4%),
Advertising (2.3%), and the spending on Regulatory Advocacy (16.5%) from the 2005 audited
table.
The Commission agreed with TURN; thus preventing utility ratepayers from paying $300,000
of EEI dues.72
Southern California Edison “has not shown it has removed all political or lobbying costs”
TURN went a step further and proposed that EEI dues be completely disallowed from
Southern California Edison’s (SCE’s) 2015 general rate case.73 According to the proposed
decision of Administrative Law Judge Kevin Dudney, SCE proposed to charge ratepayers for
$1.463 million for EEI dues (the total EEI invoice to SCE was $1.922 million).74 TURN
contended that the money paid to EEI, in Account 930, was political. TURN stated, “SCE has

Proposed Decision before the Public Utilities Commission of the State of California, Pacific Gas and Electric Company application
available at https://www.documentcloud.org/documents/3239245-COMPENSATION-to-TURN-for-SUBSTANTIAL.html#document/p8/
a331970
72

Southern California Edison 2015 General Rate Case Rebuttal Testimony available at https://www.documentcloud.org/documents/
3239584-Southern-California-Edison-2015-rebuttal.html#document/p25/a335207
73

Proposed Decision Public Utilities Commission of the State of California, Southern California Edison application available at https://
www.documentcloud.org/documents/2998283-Southern-California-Edison-revenues-for-2015.html#document/p376/a331987
74

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 not removed all of the NARUC categories that the Commission previously identified as
inappropriate for ratepayer funding because of their inherently political nature.”
TURN further claimed that EEI,
waged an aggressive campaign in Arizona against net energy metering for distributed
solar photovoltaic energy (solar PV), and SCE has not demonstrated that EEI dues to
be recovered from California ratepayers excluded these or similar activities … TURN
argues that if SCE is willing to fund EEI’s efforts to fend off distributed PV through
intervention in out-of-state utility regulatory proceedings and television advertising
(including prime spots like during NFL games), then SCE’s shareholders alone should
fund those activities.
SCE called TURN’s recommended disallowance “baseless and unreasonable.” It
recommended that the commissioners allow SCE’s forecast for EEI membership dues of
$1.462 million.75 SCE also stated in its rebuttal testimony that it asked EEI to review TURN’s
testimony. EEI provided the following:
TURN claims that “the world changed dramatically in 2013” as “EEI embarked upon a
political advertising campaign” to “fight solar.” Further TURN claims that EEI utilized
“massive television advertising,” spending “huge, undisclosed sums of money…” and
“blanketing the airwaves.” This is clearly not true. While EEI did run an ad on TV in
Arizona, it was only limited markets for a limited period of time. In face [sic], the …
data shows that the percentage of dues used for Lobbying, Public and Media
Relations, Advertising, and Marketing was 20.5 percent in 2013, less than the 21.2
percent in 2012.
While NARUC no longer requires EEI to provide detailed information, EEI has
continued to use the NARUC definitions to compute the percentage of member dues
used for Lobbying, Public and Media Relations, Advertising, and Marketing. These
percentages are compiled through a careful accounting of the time spent by EEI
lobbyists and staff as well as expenditures on programs, consultants, and other
expenses.
Despite SCE’s rebuttal plus the fact that EEI involved itself in the rate case to defend and
explain its spending - while admitting it no longer provides detailed information to
NARUC - Judge Dudney agreed with TURN. Judge Dudney stated that “SCE has not shown
it has removed all political or lobbying costs from its forecast.” However, Judge Dudney
declined to disallow all of SCE’s EEI dues outright, but adopted TURN’s methodology from
Southern California Edison 2015 Genera Rate Case Rebuttal Testimony available at https://www.documentcloud.org/documents/
3239584-Southern-California-Edison-2015-rebuttal.html#document/p25/a332133
75

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 the PG&E 2014 general rate case and reduced SCE’s forecast of EEI dues to $1 million from
the total $1.922, a disallowance of 47.9%.76
“EEI no longer publishes this information on a routine basis, having stopped NARUC audits in
the vicinity of 2006”
In September 2015, Marcus testified again on behalf of the Arkansas Office of Attorney
General during Entergy Arkansas Inc.’s (EAI’s) rate request. EAI requested that ratepayers
pay $293,398, or 81.5%, of EEI dues after adjusting out $66,362. Marcus recommended
increasing the disallowance to $145,294 - a 40% charge to shareholders. Marcus justified this
recommendation by stating that there has been a framework established for commissions to
disallow EEI’s political expenses aside from lobbying and specifically cited SCE’s 2015
general rate case. Marcus proposed to use the 2012 information that revealed EEI spent 21%
of its budget on lobbying, public and media relations, advertising, and marketing. Marcus then
added 6% for legislative policy research, 16% that was regulatory advocacy, and rounded
down “for conservatism.”77
He also stated that despite the information he has been able to compile, very little is known
about EEI expenses, though not for lack of trying:
EEI no longer publishes this information on a routine basis, having stopped NARUC
audits in the vicinity of 2006.78 EEI hands out information that it feels like giving utilities
when they ask for it, but never provides complete information in the same format that it
used to provide.
This fact was brought up by the Arizona Residential Utility Consumer Office (RUCO) during
Arizona Public Service’s rate case. In December 2016, RUCO proposed a 49.93%
disallowance of EEI dues determined by the 2005 NARUC operating expense breakdown
table. The consumer advocate office said that this figure cannot be updated because EEI
stopped providing this information after 2006. “RUCO believes after a series of regulatory

Proposed Decision Public Utilities Commission of the State of California, Southern California Edison application available at https://
www.documentcloud.org/documents/2998283-Southern-California-Edison-revenues-for-2015.html#document/p378/a310066
76

Entergy Arkansas, Inc. Rate Request, Arkansas Attorney General William Marcus testimony available at https://www.documentcloud.org/
documents/3239429-Arkansas-AG-Office-2015-Entergy-Rate-Request.html#document/p32/a335208
77

Footnote used by Marcus: Response to Initial Requests for Information (Question 65) of the Kentucky Attorney General (August 27,
2008) from Kentucky Public Service Commission Case No. 2008-00251 and 2007-00565 for Kentucky Utilities Company, found at http://
psc.ky.gov/pscscf/2008%20cases/2008-00251/
KU_Response%20to%20AG's%20Requests%20dated%20082708%20(Vol%201of3)_091108.pdf
78

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 partial disallowances of EEI dues by Commissions across the nation, EEI decided not to
provide this information to NARUC, which it had previously done for at least a decade.”79
RUCO proposed that of the $1,188,411 charged to APS for EEI dues, shareholders should
pay for $593,373, 49.93%, of that amount instead of $211,748, 20%, as proposed by the
utility. This left $946,663 to be paid for by APS ratepayers to help fund EEI, including UARG
and USWAG - RUCO noted. The consumer advocacy group further noted, “These groups
represent the interest of electric generations such as APS, TEP and UNS donations and
membership is purely voluntary, many of which are political in nature, and may not be
necessary for the provision of utility services.”80
“Staff removed amounts associated with industry dues that appear to be political or lobbying
in nature”
In Virginia, in 2015, the Associated Press revealed that Dominion was charging ratepayers for
charitable contributions, including for payments to overtly political groups like the Virginia
Chamber of Commerce that have supported the utility’s agenda in the state legislature.81
Then-Attorney General Ken Cuccinelli said, “Why should captive ratepayers, who have no
option to get electricity from another company, be compelled to fund the charitable choices of
a company? Leave the ratepayers their money, and let them make their own charitable
choices.”82
Dominion initially said it was following established State Corporation Commission precedent,
and eventually agreed to end the practice and use shareholder money for all of its charitable
giving, but pushed back against the proposal to remove EEI dues.83 Indeed, a Virginia
Corporation Commission public utility accountant proposed to remove more EEI dues than
Dominion had originally allocated in their cost of service. In pre-filed testimony, staff said that
the dues removed “appear to be political or lobbying in nature.” Yet, Dominion disagreed and

Direct Testimony of Frank Radigan, RUCO, Docket No. E-01345A-16-0036 available at https://www.documentcloud.org/documents/
3625848-RUCO-Filing-APS-EEI-Dues.html
79

80

Ibid.

Associated Press, “Dominion Power’s donations partially subsidized by its customers” available at http://wavy.com/2015/08/22/
dominion-powers-donations-partially-subsidized-by-its-customers/
81

Associated Press, “Dominion won’t include charity donations in customers’ bill” available at http://www.richmond.com/business/
article_b08eb8da-2b65-5b52-88af-f1d52032c2c9.html
82

Pre-filed Staff Testimony in Virginia Electric and Power Company case, Adjustment to Remove Lobbying Expenses from Industry Dues
available at https://www.documentcloud.org/documents/3461043-EEI-and-Dominion-Rate-Case-Documents.html#document/p16/a338180
83

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 cited EEI invoices to note that it had charged the correct amounts to the FERC codes.84 Staff,
in rebuttal testimony, still disagreed with Dominion over EEI charges to ratepayers.85
Dominion charged to shareholders the dues to other organizations that “appear political in
nature,” including the American Legislative Exchange Council, and all of the Republican and
Democratic party organizations even after staff objected.86

IV. Waning Regulatory Oversight of Ratepayers Paying for
Political Membership Dues
In 1984, according to the New York Times, the National Association of Regulatory Utility
Commissioners (NARUC) conducted a 20-month investigation into EEI’s misuse of money
collected from ratepayers of the nation’s electric utilities for lobbying and public relations.87 At
the time, EEI’s budget was about $30 million.
''It's a small amount of money in the context of utility rates, but it's a large amount in a political
context,'' said Peter A. Bradford, chairman of the Maine Public Utilities Commission, at the
time. ''It can support a national media or lobbying campaign that can have a substantial
impact on public consciousness or policies.’’88
The article revealed that during the time of NARUC’s investigation, at least a dozen states (it
noted Texas, California, Colorado, Florida, Massachusetts, and Missouri) started to disallow
part or all of dues and advertising money paid to EEI from ratepayers’ bills.
In 1985, the Washington Post reported that NARUC’s director of financial analysis had been
conducting on-site investigation of EEI’s books on behalf of NARUC. Michael Foley, the
director, said, ”It is clear to us, based on a rather probing analysis of their expenditures, that
the principal thrust of the Edison Electric Institute's activities is that of attempting to influence
Rebuttal Testimony in Virginia Electric and Power Company case, Industry and Professional Dues available at https://
www.documentcloud.org/documents/3461043-EEI-and-Dominion-Rate-Case-Documents.html#document/p128/a338184
84

Supplemental Testimony in Virginia Electric and Power Company case available at https://www.documentcloud.org/documents/3461043EEI-and-Dominion-Rate-Case-Documents.html#document/p216/a338187
85

Virginia Electric and Power Company Reclass Certain Industry Dues to Other Income/Expenses available at https://
www.documentcloud.org/documents/3461043-EEI-and-Dominion-Rate-Case-Documents.html#document/p256/a338192
86

New York Times, “Utility Group Criticized on Funds for Lobbying” available at http://www.nytimes.com/1984/07/21/business/utility-groupcriticized-on-funds-for-lobbying.html
87

88

Ibid.

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 the affairs of the federal government … The majority of the dues received from utilities are
directed toward that goal."89
The NARUC investigation was not just focused on EEI, but also groups EEI funds,
specifically that Utility Air Regulatory Group (UARG) and the Utility Solid Wast Activity Group
(USWAG).90
Ultimately, the initial investigation into EEI’s lobbying figures led to NARUC concluding that an
audit of financial records must be made and that there must be definitions that categorizes
EEI’s budget - those are the categories that William Marcus has presented in testimony (page
33 of this report).
A few years after the investigation, NARUC formed a “Committee on Utility Association
Oversight” to provide rigorous oversight of any annual EEI dues to be paid by utility
ratepayers; the National Association of State Utility Consumer Advocates (NASUCA)
endorsed that approach via a resolution passed in 1988.91 The NASUCA resolution warned
that “attempts are being made to dilute the effectiveness of the committee’s efforts…”92
In addition to providing oversight, NARUC’s Committee on Utility Association Oversight was
also charged with developing appropriate audit definitions and audit procedures for EEI, AGA,
the Committee for Energy Awareness (now the U.S. Council for Energy Awareness) and the
United States Telephone Association.93
NARUC officially disbanded the committee in 2000, but suggested that “random” reviews of
industry associations by the group’s Staff Subcommittee on Accounts would continue under
the purview of the Committee on Finance and Technology.94 It is unclear if any such “random”
reviews have occurred since, although William Marcus has been able to present EEI’s budget
categorized using NARUC codes as late as 2005.

Washington Post, “Ratepayers Said to Fuel Utility Lobby” available at https://www.washingtonpost.com/archive/business/1985/11/18/
ratepayers-said-to-fuel-utility-lobby/92d0aa17-9cd0-426e-810e-265d303321ee/?utm_term=.4996c08bbf86
89

90

Ibid.

National Association of State Utility Consumer Advocates Resolution available at https://www.documentcloud.org/documents/3213696National-Association-of-State-Utility-Consumer.html#document/p15/a327118
91

92

Ibid.

93

Ibid.

NARUC Resolution available at http://pubs.naruc.org/pub/53A13CA7-2354-D714-513A-A44A35A37CAF; Entergy Arkansas, Inc.
approval of changes in rates, Entergy Arkansas sur-surrebuttal testimony available at https://www.documentcloud.org/documents/
3519952-Entergy-Arkansas-Sur-Surrebuttal-Testimony-NARUC.html
94

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 Regulators must now rely solely on information provided by utilities and industry associations
that have an obvious self-interest in maximizing the amount of their dues that will be paid by
utility ratepayers.

Recommendations
The evidence in this report reveals that EEI is primarily and inherently a political organization,
and that much of its work targets policymakers throughout all levels of government to build
influence, specifically for their member companies but also for the industry at large. While
many states have their established practices of how to code trade association dues, they
should revisit outdated guidelines due to the nature of EEI’s modern activities to ensure that
they are adequately protecting ratepayers. Throughout the past three decades, some
regulators and consumer advocates have acted to protect ratepayers, but scrutiny has waned
dramatically. Precedent exists for public officials to act in every state to investigate whether or
not EEI’s inherently political work ought to be funded by ratepayers.
EPI recommends that:
1. Public utility commissioners and their staff should place the burden of proof on utilities to
demonstrate the exact percentage of customer money provided to industry groups and
other political organizations, including EEI, that actually benefits their ratepayers. This is
not a recommendation for commissioners to indiscriminately disallow all EEI dues, as
certain EEI programs such as storm response coordination may indeed be apolitical and
provide a benefit to ratepayers. However, utilities should have to disclose the exact
benefits that their political industry associations confer to ratepayers for each of their
activities in detail; it is insufficient for utilities to file an annual invoice from an organization
that notes the lobbying percentage, defined narrowly for tax purposes, as the only
guidance for commissions to determine what should be charged to ratepayers.
2. Consumer advocates and other parties whose mission is to protect ratepayers, such as
attorneys general, should file for discovery in order to receive additional documents to
have a better understanding how a utility company works with EEI, and whether that work
benefits ratepayers.
3. The National Association of Regulatory Utility Commissioners (NARUC) should revive the
Committee on Utility Association Oversight and audit the books of EEI, NEI, and AGA to
determine the percentage of their operations which are political in nature and therefore
ought not to be funded by ratepayers.

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 4. NARUC should compile an extensive survey that shows the percentages of dues utility
ratepayers are paying to industry organizations and political party focused groups;
particularly (though not limited to) EEI; American Gas Association (AGA); Nuclear Energy
Institute (NEI); U.S. Chamber of Commerce; Democratic Governors Association; and
Republican Governors Association. Such a manual could help utility accounting staff
across the country manage the challenges associated with determining industry
association dues during rate requests. This report reveals only several instances and is
not exhaustive.

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 Appendix I: Tables of Selected Utilities’ Requests for Ratepayer
Money to Fund EEI Dues, and Challenges to Requests
An initial, non-comprehensive review by the Energy and Policy Institute using state public
utility commission docket systems identified millions of dollars in annual utility payments to
EEI that utility ratepayers are funding. The table below provides a sample of EEI payments
that utilities have proposed to recover from ratepayers.

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 The second table highlights proposals and decisions where advocates or commissions
proposed that all or a significant amount of EEI dues be disallowed from being paid by utility
ratepayers.

Appendix II: Sample Discovery Questions
While the decisions ultimately lie in the hands of commissioners, staff and intervenors
generally have the ability to compel utilities to disclose or document further details about their
EEI dues.
Below are sample questions regarding cost recovery of utility dues to EEI or other trade
associations:

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 •

•

•

•

•

•

•

•

Provide a copy of the Annual Report of EEI and every other organization of which the
Company was a dues-paying member during the years in question.
What amount of EEI dues is the Company is asking to be recovered from customers,
and are the company’s shareholders paying for any of these dues?
Provide a copy of the formula used to compute, and the actual calculation of the
Company's EEI dues for the years in question. Also, provide a complete copy of invoices
received from EEI for dues for these years.
Provide any documents in the Company's possession that show how EEI spends the
dues it collects, including the percentage that goes to the following categories previously
provided by NARUC: legislative advocacy; legislative policy research; regulatory
advocacy; regulatory policy research; advertising; marketing; utility operations and
engineering; finance, legal, planning and customer service, and public relations.
Provide a detailed description of the services provided by EEI to the Company during the
years in question. Of these services or benefits, please provide what benefits accrue to
ratepayers, and how.
Provide copies of all work product which EEI provided to the Company during the years
in question, including (but not limited to): presentations, webinar recordings, briefing
books, meeting minutes, policy memos, white papers, etc.
Has the Company included in operating expenses any amount for EEI Media
Communications? If so, state the amount, indicate in which account this has been
recorded, and provide a citation to any and all Commission Orders or other authority
upon which the Company is relying for the inclusion of such expense in the test period. If
not, can the Company provide an estimate of how much of its dues is being spent on
media or public relations work?
Regarding the EEI invoice provided by the Company declaring that [a specific
percentage] of EEI’s dues are “relating to influencing legislation”, please say whether the
Company knows if the following expenditures made by EEI are classified as “relating to
legislation”: [relevant assuming this invoice has been provided.]
• A ten-day, $520,000 television advertising campaign in Arizona backing Arizona
Public Service’s position on net metering in 2013.
• Payments to the law firm Hunton & Williams or Edison Electric Institute related to the
Utility Air Regulatory Group.
• Payments for the Utility Solid Waste and Activities Group
• Expenditures on “We Stand For Energy,” or “Defend My Dividend,” public relations
and advocacy efforts.
• Contributions from EEI to third-party organizations and contractors including (though
not limited to):
• Democratic Governors Association

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 Democratic Attorneys General Association
• Democratic Leadership Council
• Democratic Legislative Campaign Committee
• Republican Governors Association
• Republican Attorneys General Association
• Republican State Leadership Committee
• National Conference of State Legislators
• American Legislative Exchange Council
• National Black Chamber of Commerce
• Americans For Prosperity
• State Policy Network
• U.S. Chamber of Commerce
• Congressional Black Chamber of Commerce
• NetCommunications
How much has EEI paid, during the years in question, for its effort to “rebrand” the utility
industry. Please include payments to external PR firms as well as the associated salary
to any EEI staff involved in contracting, coordinating with, or promulgating internally or
externally the rebranding campaign effort?95
Does the Company’s dues to EEI contribute to the salary, benefits and expenses of EEI
Executive Vice President for Public Policy and External Affairs Brian Wolff, who has led
an effort undertaken by EEI to rebrand the utility industry?96
List all travel and entertainment expenses incurred in the test period by Company
employees in relation to EEI and other industry association activities. Show accounts,
amounts, descriptions, person, job title and reason for the expense. Provide a copy of
employee time and expense reports and invoices documenting such expenses.
Is the Company relying upon any NARUC reports or other studies for the exclusion from
or inclusion in rates of a portion of its EEI dues? If so, please provide a copy of such
report and indicate how the report's recommendations have been included in its filing.
Do any of the Company's personnel actively participate on Committees and/or do any
other work for any industry organization to which the Company belongs? a. If so, state
specifically which employees participate, how they are compensated for their time
(amount and source of compensation), and the purpose and accomplishments of any
such association related work. b. List any and all reimbursements received from industry
associations, for work performed for such organizations by Company employees.
•

•

•

•

•

•

The Huffington Post, “This Messaging Guru Is Helping Utilities Clean Up Their Appearance” available at http://www.huffingtonpost.com/
entry/messaging-utilities-solar-power_us_56f45cd6e4b014d3fe22b572
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The Huffington Post, “This Messaging Guru Is Helping Utilities Clean Up Their Appearance” available at http://www.huffingtonpost.com/
entry/messaging-utilities-solar-power_us_56f45cd6e4b014d3fe22b572
96

ENERGY AND POLICY INSTITUTE

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