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How far will utilities go to protect their fossil fuel investments?

Coal-fired Robert W. Scherer Power Plant
The coal-fired Robert W. Scherer Power Plant is operated by Georgia Power, a subsidiary of Southern Company, in Juliette, Georgia.
(Christopher Aluka Berry / Reuters)

There’s a good chance you’ve heard about the scandal unfolding in Ohio. Last week, the FBI arrested Republican lawmaker Larry Householder, the speaker of the state’s House of Representatives, and accused him and his political operation of accepting more than $60 million in bribes from the electric utility FirstEnergy Corp. In exchange, prosecutors said, Householder coordinated passage of a $1.3-billion bailout bill that rescued several nuclear and coal-fired power plants and gutted the state’s clean energy requirements.

FirstEnergy’s alleged bribery would be an extreme case of a utility company working to protect its fossil fuel investments in the face of an accelerating clean energy transition.

Other utilities have adopted less brazen strategies. The Energy and Policy Institute, an industry watchdog group, compiled a list of examples from Arizona to Florida, and released a report showing how utilities use charitable giving to build support for fossil fuel investments and rate hikes.

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There are examples in California, too.

In a story for The Times this week, I reported that a consumer watchdog agency is investigating Southern California Gas Co., the nation’s largest gas utility, for what it describes as inappropriate use of customer money to fight climate action.

This was only the latest of several pieces I’ve written about SoCalGas. I previously examined the company’s city-by-city campaign to ward off gas bans; its use of ratepayer funds to support natural gas industry trade groups; and the SoCalGas union leader who threatened a “no social distancing” protest in San Luis Obispo if the city moved forward with a policy to limit gas.

SoCalGas has defended its actions, arguing it’s trying to keep energy affordable. The company also says there’s “lack of clarity” in the rules surrounding use of ratepayer funds and has asked the state’s Public Utilities Commission to establish clear guidelines for all monopoly utilities about what constitutes lobbying and when spending customer money is appropriate.

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There are few people more knowledgeable about utility industry lobbying than Leah Stokes, a political scientist at UC Santa Barbara. Her illuminating book on the subject — “Short Circuiting Policy: Interest Groups and the Battle Over Clean Energy and Climate Policy in the American States” — was published earlier this year.

I called Stokes to ask her about SoCalGas, the alleged corruption in Ohio and the history of utility-industry climate denial. Here are some highlights from our conversation, condensed and edited for clarity. Scroll down for the rest of this week’s news.

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ME: When most people think about the fossil fuel industry fighting against climate policies and renewable energy, they think about Big Oil — ExxonMobil, Chevron — and they think about coal companies. Why did you decide to write a book about utilities?

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STOKES: The electricity sector is the place where we’re making the most progress on climate change. And the way we’ve been doing that is through two main policies: renewable energy mandates and net metering laws for rooftop solar.

Around 2011 and 2012, these policies started to come under attack from the American Legislative Exchange Council, which is an organization that includes electric utilities. And they were working in state legislatures and regulatory bodies across the country to roll back these bedrock laws.

You can go back to the 1970s, and there were trade publications from the electric utility industry taking about climate change and how it meant that we were going to have to stop using fossil fuels. But rather than wake up to their own facts, they decided to push climate denial. As recently as 2017, the CEO of Southern Company was on television saying climate change is not real.

ME: What’s been motivating these utilities?

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STOKES: There’s definitely a profit component. Electric utilities bet a lot of money on fossil fuels. And when they were forced to reckon with clean air regulations, they had a choice. They could either shut down their coal plants and start investing in cleaner energy sources, or they could retrofit them so they could keep operating them under the new regulations.

And a lot of utilities did the latter. They sunk more debt into coal plants, which means that today if you have these requirements to build renewables, that’s going to put pressure on those coal plants and make some of them uneconomic, particularly in places like Ohio. Those coals plants were really bad bets, and they are losing money.

There’s also rooftop solar, where customers own the generation source rather than the utility. That undermines the utility business model.

ME: So in some cases it’s almost immaterial that renewable energy is so cheap these days, because these utilities are still wedded to old fossil fuel plants and to their traditional business model.

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STOKES: That’s right. A lot of people think that economics are destiny. And sure, that might be the case in some industries. But in the electric utility industry, in most places, it just doesn’t work that way.

Right now in the Midwest and across the Southeast, there are a lot of coal plants that you could turn off tomorrow, start a new wind energy facility instead and save ratepayers money. There’s modeling that shows the clean energy transition actually saves people money.

And you have to remember that a lot of regulators are captured by the utility companies. In the case of Arizona, the regulators are elected, and the utility has been sinking millions of dollars into the elections for their own regulators.

ME: The thing that’s most striking to me about the Ohio chapter in your book is you pretty much spell out the alleged bribery scheme that’s now making headlines: FirstEnergy spent $60 million and got more than $1 billion to bail out these nuclear and coal plants. And now we have the FBI saying there was an explicit quid pro quo.

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STOKES: Yes, isn’t that amazing? It was an open secret in many ways. There were a lot of journalists who did an amazing job, and advocates too, working in Ohio to try to bring this to light. And it was really sad to watch it unfold. It was very clear that Larry Householder was doing the bidding of FirstEnergy. And a lot of other Republicans have very strong ties to FirstEnergy, including Gov. Mike DeWine.

ME: I know your book is focused on electric utilities. But when you look at gas utilities, and at the types of actions I’ve reported involving SoCalGas — do you think the gas utility industry will be a major barrier to climate policies moving forward? Because they seem to be the ones who are most threatened now.

STOKES: Gas companies are a big problem, for sure. And it feels like some electric utilities are waking up, and some may even be starting to see opportunity. Because if we’re serious about electrifying transportation and buildings, the electric utility industry has a once-in-a-century opportunity to build a lot of new infrastructure and make money doing it.

When it comes to gas utilities, we are trying to eliminate their entire business model, because they sell a fossil fuel, and that’s pretty much all they do. They need to figure out some alternative, and I don’t know what that’s going to be. But they’re in the fossil fuel business, and the fossil fuel business is going out of business.

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ME: You’re a SoCalGas customer, right?

STOKES: I sure am.

ME: Has anything I’ve reported surprised you?

STOKES: There’s just been an accretion of evidence that SoCalGas is not a responsible utility acting in the public interest. They’ve done all kinds of things. They were involved in the massive Aliso Canyon gas leak. And we know they have been spending a lot of money on front groups to block building electrification in this state.

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I don’t like being their customer. And I am planning on electrifying my house so that I do not have to continue to be their customer.

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Here’s what else is happening around the West:

TOP STORIES

The Trump administration says an enormous gold and copper mine in the wilds of Alaska will not harm Bristol Bay fish populations, including the world’s largest sockeye salmon run. Environmentalists are, shall we say, skeptical. It’s still far from clear whether the Pebble Mine project will move forward, my colleague Richard Read reports. (Also be sure to check out Richard’s deep dive on Pebble Mine from last fall.)

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Bear cubs fighting over a sockeye salmon in Alaska's Katmai National Park
Bear cubs fight over a sockeye salmon in Alaska’s Katmai National Park.
(Luis Sinco / Los Angeles Times)

Climate change will fuel migration to the United States from Central America. What that will look like isn’t totally clear. But new modeling conducted by ProPublica and the New York Times Magazine paints a powerful picture of how drought and food security are likely to drive climate refugees first from rural areas to cities in their home countries, and then to the U.S. Read more from reporter Abrahm Lustgarten, with moving photos by Meridith Kohut showing the hardscrabble lives of migrants.

Southern California Gas authorized nearly $28 million for a “balanced energy” campaign to fight against policies that would phase out natural gas. The company says it originally booked those costs to ratepayers due to an “inadvertent accounting error” that was later corrected. Here’s my story, in case you missed it above.

CLIMATE IMPACTS

Climate change is bringing stronger storms and bigger floods. And as much of a problem as that is in the United States and other parts of the developed world, it poses especially serious risks in places like the Chinese countryside, where swelling rivers this year have overwhelmed flood-control dams and devastated impoverished farmers, as Alice Su reports for The Times. The floods in China have displaced 3.7 million people and left 158 people dead or missing across China.

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Hotter daytime temperatures can be dangerous, and so can rising overnight lows. The Arizona Republic’s Erin Stone reports that Phoenix recently tied a record with seven straight days where nighttime temperatures never fell below 90 degrees. When nights are hotter, it can be harder for the human body to recover from the heat of the day, and firefighters can have a tougher time getting blazes under control.

Two new studies caught my attention this week. One found that the amount of warming humanity will experience as we pump more carbon into the atmosphere is “extremely unlikely to be on the low end of estimates,” as Andrew Freedman and Chris Mooney report for the Washington Post. The other uncovered what National Geographic’s Douglas Fox described as “shocking evidence suggests that the last time the East Antarctic ice sheet collapsed, it added over 10 feet to sea level rise, and that it’s likely to happen again.” Please remember that as scary as this stuff is, we still have the time and agency to avert the worst impacts.

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POWER STRUGGLES

Congrats to my colleagues Susanne Rust, Carolyn Cole, Ali Raj and Lorena Iniguez Elebee, who were named finalists for Columbia University’s Oakes Award for Outstanding Environmental Reporting. Their reporting on the poisonous legacy of U.S. nuclear testing in the Marshall Islands has made waves in Washington, D.C., including this week, when U.S. Rep. Tulsi Gabbard called for the federal government to reexamine a leaking nuclear waste dome with “fresh eyes,” as Susanne reported.

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San Diego Gas & Electric is not happy with San Diego. The company’s license to service as the city’s monopoly utility expires next year, and a city consultant has suggested requiring SDG&E’s shareholders to pay $62 million to renew the franchise for another 20 years. But a top executive at SDG&E — which, like Southern California Gas, is a subsidiary of Sempra Energy — has described that number as “astronomical,” Rob Nikolewski reports for the San Diego Union-Tribune.

Colorado River in Austin, Texas
People gather nightly to watch bats fly out from under a bridge along the Colorado River in Austin, Texas. Please resist the urge to email me about how this is a different Colorado River than the one that supplies water to much of the Southwest; I’m aware.
(Peter 17 / Wikimedia Commons)

My colleague Russ Mitchell wrote about Tesla’s plans for a new factory in Austin, Texas. This is not the main point of the story, but what really caught my attention was Elon Musk’s claim that the factory “will also serve as an ‘ecological paradise,’ with publicly accessible pathways and boardwalks along the Colorado River where visitors can watch birds and butterflies.” Elon Musk has promised a lot of things that have not, to date, occurred, but this one would be pretty cool if it happens.

WATER AND POWER

Sometimes journalists find themselves telling the same story again and again, because it’s important for people to hear it again and again. That’s certainly been the case for Laura Paskus, who wrote a beautiful piece for the Santa Fe Reporter on what it’s been like to spend two decades covering the drying of the Rio Grande, and how she’s come to realize the problem is bigger than any one villain.

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Another story that can’t be told enough: Tens of thousands of people across the Navajo Nation don’t have running water. The Arizona Republic’s Ian James traveled across the sprawling reservation to ask residents about their struggles and better understand the obstacles to water security. I found it especially jarring to look at Nick Oza’s gorgeous photos of Monument Valley while realizing that many of the Navajo homes scattered through the buttes don’t have showers or flush toilets.

Local water officials could decide whether to approve a seawater desalination plant in California’s Orange County this week. Here’s the story from The Times’ Matt Szabo. Even if the Santa Ana Regional Water Quality Control Board signs off, Poseidon Water would still need a permit from the California Coastal Commission for its controversial Huntington Beach facility.

What do you want to know?

When you think about California’s climate future, what comes to mind? What keeps you up at night, and what gives you hope or gets you excited? What do you want to understand, and what should I?

This newsletter is for you, to help you understand how we’re changing our world and what we can do about it, and I want to hear your questions, concerns and ideas. Email me or find me on Twitter.

ONE MORE THING

We started this week with a utility, so let’s end with a utility.

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HuffPost’s Alexander C. Kaufman reports that Thomas Farrell — the longtime chief executive of Virginia-based Dominion Energy, which serves 6.7 million people in eight states — co-wrote, produced and financed a film glorifying the Confederacy. In 2014.

Kaufman’s reporting shows how Dominion’s fossil fuel infrastructure projects, including the recently canceled Atlantic Coast Pipeline, have faced accusations of environmental racism. As of this newsletter’s sending, Farrell is still Dominion’s CEO.

I’ll be back in your inbox next week. If you enjoyed this newsletter, please consider forwarding it to your friends and colleagues.


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