SoCalGas faces a $10 million fine for fighting climate change

Shareholders of the country’s largest natural gas utility could be forced to pay nearly $10 million after using customer money to fight public measures that could slow the climate crisis.

California officials are poised to collect the fine on Southern California Gas Co., which sells natural gas to millions of homes and businesses for heating and cooking, and to power plant operators for electricity generation. Fossil fuel is a major source of the heat-trapping carbon emissions that have fueled worsening heat waves, wildfires, droughts and floods, and are driving many species to extinction.

For the record:

6:31 p.m. February 4, 2022An earlier version of this story said that the decision was written by Anne Simon, Chief Administrative Justice of the California Public Utilities Commission. It was authored by administrative judge Valerie Kao.

SoCalGas has engaged in a wide-ranging campaign to block clean energy policies that threaten its business model, including local bans on gas connections in new homes and statewide efforts to encourage the construction of all-electric homes.

The $9.8 million fine was assessed by an administrative judge on the California Public Utilities Commission. It addresses a narrow set of actions SoCalGas has taken since May 2018, when the commission ordered the company to stop using customer money to fund its work promoting energy efficiency — an order the gas utility allegedly violated.

“Such impudence must be met with a high degree of severity,” administrative judge Valerie Kao wrote in her decision, published on Thursday.

A protest at SoCalGas' Ventura compressor station in July 2021.

Tomas Morales Rebecchi, right, a senior organizer for environmental group Food and Water, is joined by his family as he marches in protest in front of SoCalGas’ Ventura compressor station in July 2021.

(Al Seib/Los Angeles Times)

SoCalGas now has 30 days to appeal, which would require the five members of the Utilities Commission – appointed by Gov. Gavin Newsom – to vote on the penalty. If no objection is filed, no vote is required.

The gas company has previously denied any wrongdoing, arguing that it takes care of consumers by trying not to increase energy bills and that it can play a crucial role in tackling climate change by using cleaner fuels like renewable gas and supplies hydrogen.

“We have received the decision and are considering it. We expect and look forward to further engagement on this topic,” SoCalGas spokeswoman Christine Detz said in an email.

The proposed fine is well below the $124 million recommended by the Public Advocates Office, an independent arm of the Utility Commission working to protect ratepayers.

But while climate activists were disappointed the number wasn’t higher, it’s still “really encouraging that the commission is showing it understands that penalties are needed to deter this type of wrongdoing by SoCalGas,” said Sara Gersen, a senior Attorney for the non-profit law firm Earthjustice, whose clients include the Sierra Club.

“These efficiency standards, which SoCalGas fights tooth and nail, are absolutely essential for us to achieve our climate goals,” she said.

SoCalGas, a subsidiary of fossil-fuel giant Sempra Energy, can spend shareholders’ money however it wants — like lobbying against climate rules. However, as a state-sanctioned monopoly, it is required to spend taxpayers’ money solely on programs that benefit taxpayers, such as B. Security Enhancements.

California utilities are allowed to spend feepayers’ money to try to influence policy as long as they push for higher efficiency standards for buildings and appliances. But after the Public Advocates Office found that SoCalGas had worked with industry and trade groups to try to block a federal efficiency standard for gas stoves, the Utilities Commission ordered the company to implement “codes and standards,” backed by customer funds, set.

SoCalGas has not fully complied, the commission now says, and continues to send farepayer-funded staff to meetings that discussed state and federal policy in the months following the May 2018 order.

SoCalGas is headquartered in the Gas Company Tower in downtown Los Angeles.

SoCalGas is headquartered in the Gas Company Tower in downtown Los Angeles.

(Irfan Khan/Los Angeles Times)

SoCalGas later worked to influence California’s new building code, again aided by customer funds.

Climate activists hoped the state would ban gas hookups in new homes and businesses after following dozens of cities that have required or encouraged electric heat pumps and induction cooktops. SoCalGas pushed back, arguing in written comments that the state “should maintain a diverse portfolio of energy options,” and trying to cast doubt on research showing gas stoves and other appliances can spew unhealthy air pollution into homes.

“They have been busy reviving the tobacco industry’s playbook, which denies public health research about the dangers of using their product,” Gersen said.

The gas company has defended its efforts, arguing in a regulatory filing that the Public Advocates Office and the Sierra Club – which have joined forces to push for penalties – overextended the commission’s order banning interestpayer-funded advocacy.

SoCalGas also indicated that the commission would violate the company’s First Amendment right to free speech by penalizing it for trying to influence the update of state building codes. State officials ultimately encouraged but did not require new buildings to be all-electric.

“This is a clear attempt to punish SoCalGas for expressing viewpoints … that are different than.” [the Public Advocates Office’s] and Sierra Club, including on issues such as cost efficiency, affordability for customers, and opportunities for the state to meet its longer-term decarbonization goals,” the gas company wrote in another filing.

The company also addressed its efforts to downplay research showing adverse health effects from gas appliances, writing, “It is in the interest of the public, including SoCalGas tariff payers, to have accurate and complete information about indoor air quality. “

The commission was not impressed by the gas company’s defense.

The agency’s decision said the utility’s arguments as to why it should not be penalized “demonstrate a deep, brazen disrespect for the authority of the commission.” The company’s behavior “has exacerbated its wrongdoing, as its non-compliance has become a series of criminal offenses against the authorities of the commission,” wrote Kao, the administrative law judge.

The bulk of the fine — $9.6 million — would penalize SoCalGas for “damaging the regulatory process,” including the company’s failure to provide information required by the Public Advocates Office. The remainder would consist of a series of smaller penalties for certain violations of the commission’s order, which requires the company to cease interest-payer-funded advocacy.

Amanda Pantoja leads chants at a protest by Protect Playa Now calling for the closure of SoCalGas' Playa Del Rey storage field.

Amanda Pantoja leads chants at a protest by Protect Playa Now calling for the closure of SoCalGas’ Playa del Rey gas storage field on LA’s west side.

(Gabriella Angotti-Jones / Los Angeles Times)

This isn’t the first time SoCalGas has clashed with climate activists and consumer advocates over its climate-related stance.

The Public Advocates Office and the Sierra Club have also asked the commission to fine the gas company $255 million for a separate series of taxpayer-funded measures, including efforts to block regulations that make more efficient water heaters and stoves require, and violating local building codes that restrict gas connections. A spokesman for SoCalGas responded that the utility “should not be dissuaded from raising concerns about the affordability of the proposed rules, which would disproportionately raise costs to our customers.”

“SoCalGas has been and will continue to be a partner to meet California’s ambitious climate goals,” SoCalGas wrote at the time.

The Public Utilities Commission eventually asked the gas company to refund customers some money, but declined to impose a penalty, let alone $255 million. The Public Advocates Office and the Sierra Club are appealing this decision.

SoCalGas was also criticized for using taxpayer money to start a self-proclaimed advocacy group called Californians for Balanced Energy Solutions, which supported the company’s successful campaign to convince city and county officials not to support local gas bans. SoCalGas later agreed to bill shareholders for their contributions to the group instead.

Meanwhile, SoCalGas faces ongoing calls to close gas storage fields that critics say threaten the health of surrounding communities, including the Aliso Canyon facility in the San Fernando Valley and the Playa del Rey facility on LA’s west side .

Clean energy advocates say Newsom has failed to fulfill its promise to expedite the closure of the Aliso Canyon storage field that led to a record-breaking methane leak in 2015. Just this week, SoCalGas settled a lawsuit over the Aliso Canyon leak and agreed to monitor levels of benzene, a cancer-causing chemical, in the breath of Porter Ranch residents.

The Times also reported last year that oil giant Halliburton – hired by SoCalGas to bring the Aliso Canyon eruption under control – claims key evidence of its failure to stem the spill could not be examined by state investigators, because the only copies were on a single computer stolen from a pickup truck. SoCalGas faces a $10 million fine for fighting climate change

Tom Vazquez

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