Protecting Ratepayers from Utility Political Spending

Prohibitions on using ratepayer funds for utility lobbying and political spending can lower utility bills.

Table Of Contents
  1. Why This Matters
  2. Policy Solution
  3. Model Policy Features
  4. Potential Limitations & Pitfalls
  5. Complementary Policies
  6. Additional Information
  7. Examples
  8. Resources
COMMUNITY BENEFITAffordability
KEYWORDSUtility Rates
REGIONState
AFFORDABILITY STRATEGYUtility Reform: Cost Containment
OVERSIGHTLobbying and Election Oversight Bodies, Utility Commissions
POLICY MECHANISMLegislation, Regulation

Why This Matters

Investor-owned utilities engage in many costly activities unrelated to or even in conflict with their obligations of service to ratepayers, mostly notably political activities. But, until recently, comprehensive state laws or rules to prohibit or limit “recoverability” of political or other non-service costs from ratepayers, via their electricity and gas bills, have not been codified.1 While utility corporations, as regulated, ostensibly public-serving monopolies, are generally restricted under federal and state laws from including direct legislative lobbying costs or political campaign contributions in their revenue proposals, there can be loopholes or lack of accountability for spending on other types of political activities, such as lobbying of state agencies and grassroots lobbying.2 Further, qualifying and quantifying the amount of lobbying they do has largely been left for the utilities to decide, and many other types of non-service spending are sometimes charged to ratepayers, such as legal fees, advertisements for branding and greenwashing, advocacy group donations, executive perks, and investor relations.3 In other cases, the costs of activities that may be legitimately useful to ratepayers in some contexts, such as hiring external consultants, have no spending caps or guardrails to identify qualifying activities. For the most part, the issues surrounding political and other non-service spending by utilities play out in the context of rate cases, where utilities propose revenue requirements for their services—known as cost of service—and regulators have to decide what spending counts and what does not in setting the utilities’ authorized revenue amounts.

Policy Solution

Public utility commissions can develop and enact detailed rules to disqualify utility spending on all forms of political activity and non-service business activities from being “charged” to ratepayers, which is to say that no spending in the proscribed categories shall be counted in authorized revenue and considered recoverable to the utility corporation and its shareholders via utility bills. Where utility commissions are falling short on this mandate, legislation directing the commissions to develop and implement such rules on a specific timeline can be introduced, and legislators can thereby establish the framework for what the commissions are then required to order, implement, and enforce. Either way, precise delineation of the full range of “unrecoverable spending” and covered activities under the rules is the backbone of such a policy. 

Model Policy Features

  • The range of covered spending should include, at a minimum, all direct and indirect lobbying expenses, broadly defined; all manner of political campaign contributions; advertising, marketing, and public relations costs related to influencing state policy or public opinion; donations to advocacy groups and charities; and membership fees in utility-related trade associations and other business groups that engage in direct or indirect lobbying. Examples of spending that potentially should be more selectively limited include consulting or other professional fees: consulting fees related to influencing utility commission proceedings should not be charged to ratepayers, but consulting or marketing fees related to direct service improvements such as increasing customer enrollment in energy efficiency programs might justifiably be charged to ratepayers.    
  • Specific “rate case expenses,” primarily in the form of lawyers’ fees, should also be subject to certain constraints on recoverability. While there may be constitutional limits on strictly banning recoverability of utility legal expenses in rate cases, some version of a reasonable limiting principle is clearly warranted. This could entail splitting of legal fees between shareholders and ratepayers, or limiting recoverable legal fees to be at parity with ratepayers’ contribution to intervenor compensation programs where these exist.     
  • While charging ratepayers for utility advertising costs is restricted in many states, the scope and criteria of disqualified spending should be carefully considered to ensure that ratepayers aren’t footing the bill for branding, greenwashing, or “good will” advertising that is of no direct benefit to them and in some cases may even be harmful because it is intentionally misleading. This is especially important given the amount of spending in question, totaling over $1 billion by fifteen of the largest utilities between 2014-2023.4
  • States should also impose fine-grained spending disclosure requirements and accounting and reporting standards and formats to prevent utilities from hiding, misrepresenting, or inadvertently passing through political and non-service costs to ratepayers.5
  • Violations of spending rules or accounting and reporting requirements should be a cause for impactful and enforceable financial penalties.

Potential Limitations & Pitfalls

  • Consumer advocates often do not have resources or data access to forensically research how utilities are spending ratepayers’ money, so efforts to limit recoverable utility spending can be hampered by information gaps.  
  • Generally, such utility rules need more precision and legal teeth to avoid being circumvented, subject to costly disputes, or inconsistently applied. 
  • Utility accountability in this area does not directly address the problem of utility political campaign contributions, which should be banned in states that do not already prohibit such spending by utilities.6 However, while utilities are prohibited from directly contributing to political candidates in many states, they can and do make indirect contributions through Political Action Committees and other third-party campaign finance vehicles. In the Citizens United-era of campaign finance law, states are constrained in what they can do to limit indirect corporate political spending. But, at a minimum, they likely can require public disclosure of indirect political expenditures in state elections and ballot initiatives.  

Complementary Policies

Policies that can support efforts to protect ratepayers from utility political spending include:

  • Public funding for intervenor subsidies and programs could be established or increased and include legal and accounting services to assist advocates in challenging illegitimate spending of utilities.  
  • As a matter of public trust, utility finances should be subject to periodic independent audits to ensure transparency of and accurate representation of spending and costs.

Additional Information

According to the Energy and Policy Institute, since 2023, 21 states have introduced legislative or regulatory proposals to “prohibit investor-owned utilities from using customer funds to support political activities.” As of 2025, four states—Connecticut, Colorado, Maine, and California—have passed such legislation, and in 2025 Maryland passed a law including  a provision that prohibits utilities from charging customers for trade association dues (New York passed a similar prohibition in 2021).7 

Examples

1. An Act Strengthening Protections for Connecticut’s Consumers of Energy – SB7: An Act Strengthening Protections for Connecticut’s Consumers of Energy (2023)

Details:

Connecticut’s SB7, passed in 2023, prohibits investor-owned electric and gas utilities from charging customers for costs related to the following activities:

  • Lobbying or legislative action as defined in the state’s general statutes.
  • Advertising, marketing, and communications that seek to influence public opinion or any such costs unless they are approved by the state’s Public Utilities Regulatory Authority or Department of Energy and Environmental Protection.  
  • Rate case preparation and participation, including staff compensation, legal fees, and consulting/expert witness fees.
  • Board of Directors and investor relations (meeting and retreat costs, chartered travel, luxury perks, etc.).
  • Membership dues to industry trade associations and other business groups; contributions to associated non-profits and other charities.
  • Additionally, the law requires annual line-item disclosure of utility spending in these areas; the required disclosures can, among other things, assist regulators and intervenors in rate cases in detecting irregularities and exposing illegal/unnecessary ratepayers costs.8 

Notably, EPI found that, between June 2023 (when the law became effective) and September 2024, Connecticut’s two main investor-owned utilities, Eversource and Avangrid, spent nearly $10 million that is now considered unrecoverable from ratepayers under SB7.9

The law includes other ratepayer protection measures, such as a prohibition on gas utilities providing new gas customers with allowances to reduce the cost of their hookups, a recoverable cost to the utility which is now eliminated and no longer to be borne by its ratepayers.

LIMITATIONS:

  • A significant challenge for such utility political accountability laws is potential limitations on the definition of lobbying, as well as more general challenges related to implementation. For more on these, see the Colorado example below.

 2. Colorado Utility Regulation Act – SB23-291: Concerning the public utilities commission’s regulation of energy utilities, and, in connection therewith, making an appropriation (2023)

Details:

This legislation, also passed in 2023, has many similarities with the Connecticut law in prohibiting cost recovery of spending on lobbying activities, rate cases, or other utility proceedings, trade association dues and charitable contributions, advertising/public relations, and board and investor relations. Other spending specified as covered under SB23-291 includes:

  • Direct or indirect political contributions.
  • Tax penalties or fines.
  • Directors’ costs above 50 percent of their total Board-related compensation and expenses.
  • Expenses for chartered aircraft travel. 
  • Marketing and administrative expenses associated with any unregulated products and services sold by utilities or affiliated businesses.  
  • Entertainment or gift expenses.

SB23-291 also addresses other critical areas of ratepayer protection and broader societal goals. The law sets new parameters to increase public information about proposed rate increases or adjustments, while also imposing limits on recovery from ratepayers of executive compensation; it also requires monthly instead of periodic outage reports, and establishes a utility-funded intervenor compensation program for environmental justice stakeholders who participate in that utility’s rate case. The conjoining of utility political spending issues with broader, policy-driven ratepayer protections, rate-making reforms, and community representation financing is telling as the longstanding power clash between public and private interests in utility governance is increasingly sharply underscored by rising utility bills and energy burdens across the country. 

LIMITATIONS:

  • Colorado’s law specifies lobbying costs only as related to legislation and related policy mechanisms such as resolutions, ordinances, and ballot measures, but it does not specify lobbying on rules and regulations as a covered activity under the law. So, for example, if the legislature passes a law requiring grid upgrades to enable interconnection of new distributed energy resources in disadvantaged communities, utility spending related to public comments or other communications with regulatory staff about the specific rules for implementing the law could potentially be exempted from disclosure as non-recoverable spending. So could expenses for grassroots lobbying, such as a message-sending robocall effort enlisting customers and directed at a governor and relevant agency heads. Gas utility lobbying, for example, say, on new pipeline safety codes, could similarly be exempted. 
  • There are also more general challenges, mostly related to implementation. The Connecticut and Colorado laws (and similar laws gaining traction in other states) may not be prescriptive or detailed enough to prevent a watering down of intent and effects in the rulemaking stage, particularly in areas with pronounced utility resistance, such as spending disclosure requirements. Relatedly, legislation may not be sufficiently prescriptive in requiring specific and impactful financial penalties if utilities fail to comply with the law.10

Resources

For legislative advocates, Solar United Neighbors and Energy and Policy Institute have developed detailed model bill language. See: 

A state legislation tracker on removing political spending from utility bills is available at:

Written: December 2025

  1.  In this policy summary, the term “ratepayers” is interchangeable with the term “customers,” which is also commonly used in research and reporting on utility issues. ↩︎
  2. In New York State, National Fuel, a gas utility, implemented a robocall campaign to encourage customers to oppose legislation banning natural gas heating and appliances in new buildings, which nevertheless passed in 2023. See Kinniburgh, C. (2023). Fossil Fuel Companies Enlist Customers to Fight New York’s Climate Law. New York Focus. The New York State Public Service Commission investigated the robocall effort and found that the utility would have charged ratepayers for some of the costs associated with the campaign, but this was determined to be due to accounting errors and “sloppiness” and not deemed a legal violation. See Kinniburgh, C., (2024). After Scolding by Regulator, National Fuel Resumes Campaign Against Gas Transition. New York Focus.  ↩︎
  3.  It should be noted that, in many states, broad limits on recoverability of utility advertising costs have been established in law or regulation or by other policy means, in some cases for decades. On utility advertising and generally, see: Weinmann, K., and Vardi, I., (2024). Power Trip: How Utilities Use Customer Money to Fund Lobbying, Corporate Branding, and Luxury Lifestyle Expenses. Energy and Policy Institute. ↩︎
  4. Ibid. ↩︎
  5. On disclosure requirements, see Pomerantz, D. (2023). Getting Politics Out of Utility Bills: How policymakers can protect customers from being forced to fund utilities’ political machines. Energy and Policy Institute. ↩︎
  6. Utility political campaign contributions became legal in thirty states after the 2005 repeal of the federal Public Utility Holding Company Act devolved jurisdiction of utility campaign finance rules to the states. On the regulatory effects of utility political contributions, see Van Orden, M. (2023). Why states should prohibit utility political contributions. Utility Dive, and Van Orden, M. (2023). Power Play: Political Contributions and Regulatory Capture in the Electric Utility Industry. Center for Growth and Opportunity at Utah State University. ↩︎
  7. Green, S. (2025). Tracking State Legislation to Get Politics Out of Utility Bills. Energy and Policy Institute. ↩︎
  8. Vardi, I. (2025). New Laws Curbing Utility Political Spending Saving Ratepayers Millions of Dollars. Energy and Policy Institute. ↩︎
  9. Ibid. ↩︎
  10. How Colorado’s law was watered down on penalties is discussed in: Smyth, J. (2023). Colorado law prohibits utilities from spending ratepayer money on politics. Energy and Policy Institute. ↩︎