ALBANY, NY (05/18/2023) (readMedia)-- Yesterday, NY Focus reported that a National Fuel Gas campaign spreading lies about cost-saving, clean energy measures in New York is unwittingly funded directly by the utility's own customers. Along with monthly gas bills, National Fuel sends their customers brochures that direct them to a website where they're supposed to get tips about energy efficiency. On this website, National Fuel is promoting a call to action against climate legislation like the NY HEAT Act that would save customers money. State laws prevent utilities from paying for lobbying through rates, and the New York Public Service Commission is now investigating.

Read the story here and copied below.

"National Fuel should be using funds to help New Yorkers save money and reduce harmful gas use. Instead, they are inappropriately using customers' money to stoke fear, with misinformation that keeps our bills high. Legislators must stand with New Yorkers and pass the NY HEAT Act, which would lower utility bills an average of $75 a month for those least able to pay. Corporations Committee Chairman Zebrowski must protect New Yorkers lungs and wallets, not National Fuel's profits, and bring it to a vote now," said Jessica Azulay, Executive Director of Alliance for a Green Economy.

Low- and middle- income households are the most impacted by volatile gas prices and high energy bills, paying three times more of their income on energy bills than non-low income households. Low-income residents of New York City spend a staggering median of 9.3% of their household income on their energy bills. The NY HEAT act would cap energy bills at 6% of household income for these families, saving them up to $75 per month. On top of these savings, the NY HEAT Act gets rid of the unfair 100 foot rule, which forces New Yorkers to pay for subsidized gas hookups for new customers to the tune of $200 million every year. Plus, it could redirect up to $150 billion by enabling neighborhood-scale electrification projects, money that would otherwise be spent replacing old gas pipes with new gas infrastructure that will become obsolete well before it's paid off by ratepayers. In fact, a new report from the Building Decarbonization Coalition shows that as New York electrifies, families who are left behind on the gas system could see their gas bills rise by thousands of dollars if we don't pass NY HEAT.

The final budget included the first-in-the-nation All Electric Building Act, which will require new buildings in New York to use efficient electric heating and appliances starting in 2026. But the work to decarbonize buildings is not complete without NY HEAT. This bill would lay the legal and regulatory foundation for an affordable transition off fossil/methane gas as recommended in the state's Climate Action Scoping Plan. To reach New York's climate goals, and dramatically reduce air pollution, the state needs to electrify most buildings by 2050.

Background

A new report from the Building Decarbonization Coalition finds that every new mile of a gas pipeline costs customers an average of $6 million - that's $60,000 per customer on that line! But a new memo from Alliance for a Green Economy shows how NY HEAT would redirect money NYS is already spending on costly gas investments toward climate-friendly solutions, while saving money for hardworking New Yorkers.

Last year, NY HEAT (formerly known as the Gas Transition and Affordable Energy Act) enjoyed support from Governor Hochul, Senate leadership and environmental groups, but a campaign financed by the fossil fuel industry that spread disinformation and lies derailed the bill. The industry set up a front group called New Yorkers for Affordable Energy to preserve the status quo. A report from Little Sis reviewed the organization's tax filings which show that its mission is "to expand natural gas service." The group is meant to have the appearance of a grassroots coalition, but it was founded and is run by fossil fuel executives. From the report: "The coalition is backed by a range of fossil fuel companies and lobbying groups, including utility companies National Fuel and National Grid; pipeline companies Williams, Enbridge, and Millennium Pipeline; and the American Petroleum Institute. Other backers include corporate lobbying groups like the Business Council of New York State, regional chambers of commerce like the Buffalo Niagara Partnership, and fossil fuel industry trade groups like Independent Power Producers of New York and Energy Coalition New York."

Nationwide, the fossil fuel industry is still heavily involved in misinformation efforts against necessary legislation like this. The New York Times reported recently about the Propane Education Research Council sponsoring HGTV star Matt Blashaw. Blashaw calls propane - which contributes to climate change and is the most expensive heating fuel- "an energy source for everyone."

Are Your Gas Bills Paying For the Campaign Against Banning Gas?

National Fuel customers paid for a website directing New Yorkers to oppose electrification mandates, documents show.

NATIONAL FUEL has an ominous warning for its customers: Governor Kathy Hochul is proposing "drastic measures" to phase out natural gas, driving up energy bills and threatening the reliability of the grid. "The time to speak up is now," the utility urges.

It's a familiar message coming from the gas-only utility. The twist? The website where it appears, targeted at National Fuel customers in western New York, was funded directly by the utility's own customers - to the tune of hundreds of thousands of dollars.

State law bars utilities from recovering lobbying expenses through rates. Unlike other businesses, utilities are monopoly providers: If you live in a certain area, you generally don't have a choice who supplies your gas or electricity, and the companies face tight regulation in exchange for this privilege.

But certain activities can slip through the cracks of those regulations - and critics say utilities are exploiting their monopoly power to lobby against the interests of the people they serve.

Spokesperson Karen Merkel denied that National Fuel used customer funds to lobby. "As a utility, we believe we are obligated to discuss energy issues," she said. "We are dutybound to educate our customers on major energy developments that impact their bills, and certainly on developments that might impact energy choice in the future."

National Fuel directs customers to the "Fueling Tomorrow Today" website through brochures sent out with monthly gas bills, among other means. The section on New York's climate law is only one part of the site, which mostly offers tips on how to conserve energy and take advantage of incentive programs.

A button on the site sends users to a pre-written email telling their state representatives that "the push to limit or ban natural gas is incredibly irresponsible" and that "I worry about public safety during the next major winter storm, and whether my neighbors and I will be able to stay warm if the electricity goes out."

According to filings with New York's Public Service Commission, National Fuel spent $100,000 on the website and associated digital media during its 2022 fiscal year. It plans to spend just over that amount - $110,000 - this year. The funding comes from an energy efficiency program, the Conservation Incentive Program, that is paid for through a line on customers' bills.

Merkel said that the page directing users to lobbying materials was "not paid for by utility customers." It was National Fuel's shareholders who picked up the tab, she said. She acknowledged that the utility keeps an advertising firm, the Martin Group, on retainer to update its website and create associated promotional materials.

Itai Vardi, research and communications manager at the utility watchdog group the Energy and Policy Institute, said National Fuel's claim that the individual lobbying page on its site was not funded by customers amounted to "splitting hairs."

The utility's disclosures show that the cost of making the site was "recovered wholesale from ratepayers," he said. "For the utility here to claim that this web page alone was exempt... is not reasonable."

Utility rates are set in months-long state-run proceedings, which operate much like court cases. Companies are restricted in how they can spend the money they earn from customers, or "ratepayers," as a result of those proceedings.

National Fuel is "using a website that they designed originally to serve as a place where customers can get helpful tips about energy efficiency... and within that website, they're inserting a call to action against important climate legislation," Vardi said. "That's a pretty bold strategy."

Looking at the website, Assemblymember Monica Wallace - whose office was flooded by National Fuel-prompted robocalls in February - said it seemed "totally inappropriate."

"It would appear to be a violation of both the spirit and the letter of the law," Wallace told New York Focus. "I would urge the Public Service Commission to investigate that further and hold them accountable if that is in fact the case."

The Public Service Commission is already investigating whether National Fuel has illegally used customer funds to lobby, spurred by New York Focus's reporting on the company's robocalls to customers in early March. psc spokesperson James Denn could not provide a date when the investigation is expected to conclude, but said that "if the website is in violation of those regulations, the Department will seek appropriate financial penalties or appropriate remedies."

Merkel said the campaign has generated more than 16,600 emails to Hochul and western New York elected officials, and Buffalo-based Senator Sean Ryan said he has seen the effects first hand.

"Campaigns opposing building electrification in New York have created a lot of unnecessary confusion and consternation about the state's plans to move toward a more sustainable future," he said. "My office has received hundreds of form emails and fielded dozens of phone calls from people mobilized by National Fuel's campaign."

No other major New York utility has used customer funds to oppose electrification so directly, according to filings reviewed by the Energy and Policy Institute. New York's largest gas utility, National Grid, reported last year that it has sworn off promoting natural gas expansion.

One small gas utility, Corning Natural Gas - which serves about 15,000 customers in New York's Southern Tier - has created a grassroots lobbying page similar to National Fuel's. It includes the same campaign slogan, links back to the Fueling Tomorrow Today site, and offers a detailed form letter to lawmakers opposing fossil fuel bans.

Corning's site, Don't Fool With My Fuel, only came online this spring, and the company's latest outreach report to the psc doesn't include any details on how it was funded. Corporate secretary Julie Lewis told New York Focus that the company is "tracking all costs for the campaign" and allocating them "below the line, not to our customers."

PROPANE PARALLELS

Utility activities are well documented because, as monopoly providers, they are closely regulated by the psc. But other fossil fuel companies have also put customers' money to legally questionable ends - most notably, the propane industry.

Under a 1996 federal law, an industry group called the Propane Education & Research Council is allowed to collect a half-cent fee on every gallon of propane sold, ostensibly to promote gas safety and research cleaner-burning fuels. But critics say perc has abused this "checkoff program," using its roughly $40 million budget to market propane and fight electrification.

The group funneled $615,000 to its New York affiliate last year, to help cover the costs of a spirited campaign in defense of gas. According to a February 2022 budget, the bulk of that funding went toward digital ads, while $55,000 went toward a leaflet that local propane suppliers send out with customers' bills.

"Historically high energy costs in Europe, blackouts in Texas and California - that could all happen here," warned one edition of the leaflet last year. Another, this January, railed against New York's "extreme and unrealistic" climate plans, which could spell "potentially catastrophic changes" to the state's electric grid. It included a call to action, encouraging customers to contact state lawmakers and pointing them toward a campaign website with the necessary tools.

The communications consultant behind that website wrote in an industry publication that the Propane Matters leaflet has "has been funded with state percdollars for years."

Bill Overbaugh, director of the New York Propane Gas Association, confirmed that the group had used percfunding to solicit comments on the climate plan. But he said they were directed only at the Climate Action Council, an advisory group, and therefore didn't amount to legislative lobbying - which is specifically barred by federal law. Any messaging addressed to lawmakers was paid for separately, with funds raised by the gas association's members, he said.

The January edition of the group's leaflet specifically encourages customers to contact Hochul and state legislators. Overbaugh said perc helped pay for the leaflet, but that the front page - which includes the call to action - was funded only by the New York propane association.

perc did not immediately respond to a request for comment.

Some states have stepped up their scrutiny of energy suppliers. Colorado recently passed a law requiring utilities to report annually on lobbying activity - including around rulemaking - to ensure that customers aren't the ones footing the bill. That goes a few steps further than the laws currently in place in New York.

Charlie Spatz, a researcher at the Energy and Policy Institute, said it matters who pays for lobbying. Any funding from shareholders cuts into their profits, so they tend to be cautious in how they spend it.

"When it is ratepayer funding, it's essentially like a free credit card," Spatz said.