With the latest rate hike, Louisville Gas and Electric and Kentucky Utilities customers will help pick up the tab for membership dues at trade groups that lobby against environmental protections.
Whether customers like it or not, LG&E’s natural monopoly guarantees that everyone buying service in their territory will pay into these trade groups, even if those groups lobby against customers’ own interests.
This year LG&E/KU customers will shell out about $1 million to two such organizations, according to Louisville Gas and Electric.
LG&E says membership in these groups benefit customers and help keep costs low, but utility watchdogs say these organizations sue to rollback environmental rules and lobby against small-scale renewable energy interests in states like Kentucky.
“The utility company is taking some of your money and sending it out of state, sending it to these trade groups, sending it, in fact, to law firms that in some cases are working to weaken environmental and air regulations,” said Matt Kasper, research director at the Energy and Policy Institute, a utility watchdog organization.
Earlier this year, Kentucky residents may have seen Facebook ads in support of Senate Bill 100 – a bill that solar advocates warn will decrease demand for small-scale rooftop solar and give utilities an unfair advantage.
Those ads were paid for by the Edison Electric Institute, an association that represents all investor-owned electric companies in the United States including Louisville Gas & Electric and Kentucky Utilities.
Kentucky rules prevent customers from picking up the tab for promotional and political advertising on behalf of investor-owned utilities, but also allow customers to pay a percentage of dues for trade group memberships if they provide a benefit.
Sometimes, those lines blur. Take for instance, the Edison Electric Institute.
Utility industry consultant Donna Mullinax said EEI no longer provides a breakdown of operating expenses by category, according to testimony in the latest rate case. That means it’s not clear how much of EEI’s spending goes toward influencing legislation.
As a result, Kasper said it’s likely that customers have helped pay for ads.
“It’s very much likely that the money that was spent on these ads does not fall under the IRS definition of lobbying, so it is very likely that customers probably paid for those ads,” Kasper said.
LG&E is also recovering membership costs for the Utility Air Regulatory Group, an organization Politico calls a “lobbying firm” that spends millions of dollars fighting to repeal Obama-era environmental regulations, including rules under the Clean Air Act.
An Indiana utility also reported its membership dues for the Utility Air Regulatory Group as 100 percent lobbying back in 2015.
But still, LG&E/KU customers this year are projected to pay about $269,000 toward membership in the Utility Air Regulatory Group, and another $727,000 toward dues for the Edison Electric Institute, according to Louisville Gas and Electric spokeswoman Natasha Collins.
Collins said industry organizations benefit customers through the exchange of best practices and advancements in technology that help lower costs.
“They do things like provide training. They provide timely information and guidance and offer programs that ultimately enable us to better serve our customers,” she said. “That’s why we believe our participation in these groups is important.”
The Kentucky Office of the Attorney General asked LG&E/KU about their membership dues in the latest rate case, but allowed the spending as part of a settlement agreement approved by the Kentucky Public Service Commission.
Spokeswoman Crystal Staley said the office ensured expenses related to influencing legislation were not passed onto customers.
“The attorney general is committed to examining any costs that utilities seek to recover that don’t directly benefit customers,” she said.