S6, Ep8 | Anatomy of a Front Group

Drilled S6, Part2 Ep3

Speaker 1 [00:00:09] At the end of 2020, residents in the coastal California town of Santa Barbara were getting a bunch of weird notifications on their phones.

Speaker 2 [00:00:22] These just spam texts out of nowhere that say, you know, urgent alert, Santa Barbara City is going to ban gas and destroy the grid and drive up energy prices, Contact them immediately.

Speaker 1 [00:00:37] That's Katie Davis, who runs the local chapter of the Sierra Club talking to the podcast, A matter of Degrees last year. The show is co-hosted by Leah Stokes, an energy policy expert and author of a book about corrupt utilities called Short Circuiting Policy, who We Heard from last episode. Stokes also happens to be a professor at University of California, Santa Barbara, and lives in town. When these robo calls and texts about a proposed gas ban for new buildings in Santa Barbara started to make the rounds, Stokes and Davis got in touch. Here they are talking about it. On a matter of degrees.

Speaker 2 [00:01:18] One thing Katie and I both noticed is that the first round of text messages were totally anonymous. There was nothing saying this is from such and such group. It was really sketchy. They seem to have hit everyone in Santa Barbara because a lot of people we know got them. Even the city council members got them. A lot of people were misinformed by it. It was really misleading.

Speaker 1 [00:01:37] The text messages directed recipients to go to the website of something called Californians for Balanced Energy Solutions, or C, four B's, where they could write to the Santa Barbara City Council to oppose the measure. Mike Campbell wanted to know exactly who was behind this effort.

Speaker 3 [00:01:57] I'm a program manager at the Public Advocate's office.

Speaker 1 [00:02:01] That's an office inside the California Public Utilities Commission, which is the state agency that regulates privately owned public utilities. I know that sounds weird, but yes, it's a thing. Campbell's office keeps an eye out for predatory behavior and makes sure that utilities are treating their customers fairly. At the time, Campbell was already investigating the gas utility in Santa Barbara. So Cal Gas.

Speaker 3 [00:02:29] We have been looking at so Cal Gases activities as it relates to their efforts to undermine, impede, thwart, choose your synonym California's GHG goals.

Speaker 1 [00:02:44] That's the state's greenhouse gas reduction goals.

Speaker 3 [00:02:47] Particularly as it relates to their interest in maintaining a high level of gas usage and making sure that the number of gas customers continues to grow.

Speaker 1 [00:02:58] Campbell discovered how SoCal Gas was going about trying to undermine new policy efforts that would reduce reliance on gas. And he realized that not only had the utility been marketing and lobbying against measures that would reduce the amount of gas they could sell.

Speaker 3 [00:03:16] They have been trying to have their customers pay for it by it.

Speaker 1 [00:03:20] There he means the lobbying and marketing. So Cal Gases customers were footing at least part of the bill for these efforts.

Speaker 3 [00:03:27] And they have also worked to try to obscure some of the lobbying efforts they have had by creating front groups and not being transparent about entities that they hire to speak on their behalf.

Speaker 1 [00:03:39] Californians for Balanced Energy Solutions, the group that was texting Santa Barbara residents about a proposed gas found there was just such a group. And the chair of the group at the time was a guy you might remember from episode one, Eric Hoffman. He was the one who sent San Luis Obispo Mayor Heidi Harmon an email threatening a COVID superspreader event if the city council went forward with its vote on a gas ban.

Speaker 4 [00:04:07] So as we start to get momentum in building electrification, this group emerged. It was probably early 2019 called Californians for Balanced Energy Solutions.

Speaker 1 [00:04:17] Matt Vesper is an attorney with Earthjustice. This is him talking on the podcast, A Matter of Degrees.

Speaker 4 [00:04:24] It had a glossy website. It was just very professional. It had a number of members, you know, sort of coalition partners. It wasn't really clear who was really behind this from the website. It was clearly some kind of front group. It was just like so high budget and so polished. It was just not something that was remotely grassroots, obviously. And I think it just kind of came out of nowhere. And also, like, what is a Californian for balanced energy? What does that even mean? You know, it's just it's just such a clearly front group name.

Speaker 1 [00:04:51] And it's illegal activity included way more than just those unwanted text messages in Santa Barbara. That's the story we're going to get into in today's episode. Welcome back to Drilled. Season six Part two The New Climate Villains. I'm Amy WESTERVELT. Today, anatomy of a front group. That story coming up after this quick break.

Speaker 3 [00:05:31] There is two time periods. One is one where they're violating the commission's policies, undermining codes and standards.

Speaker 1 [00:05:38] This is Mike Campbell, again, with the California Public Utilities Commission's Public Advocate's Office. He says to understand the full context around Californians for Balanced Energy Solutions, see for B.S., you have to see it as part of a pattern of SoCal gas breaking rules. Which, according to Campbell, goes back a few years back before the Electrify Everything movement really took hold and gas bans started to sweep at the states. That history starts with so-called gas's participation in a state and federal energy efficiency program. The program allows utilities to use money from their customers to help promote stricter energy efficiency codes and standards for buildings and appliances.

Speaker 3 [00:06:28] So, you know, to make your hot water heater, use less gas to make your furnace, use less gas in your dishwasher, what have you. And we in looking at so Cal Gases and other utility applications where they were seeking the commission's approval for their various energy efficiency activities, we uncovered evidence that SoCal Gas was taking the customer's money, but then they were spending it to actually not promote strong interest standards. They were doing the opposite.

Speaker 1 [00:07:04] In other words, SoCal Gas was using a program that was supposed to allow utilities to basically charge their customers for various efforts that would improve energy efficiency and instead used it to fund efforts working against energy efficiency. Campbell's office compiled evidence of this and presented it to the California Public Utilities Commission in a hearing in 2018. The Commission found the evidence compelling and barred SoCal Gas from participating in the energy efficiency program. This was a year before the first gas ban in the country was passed in Berkeley, and almost two years before the first gas ban was proposed in so-called Gas's territory. That measure in San Luis Obispo that we talked about in episode one, Campbell says that even though they got this official section, SoCal Gas kept misleading customers and the Public Utilities Commission on Energy Efficiency. According to him, not only was SoCal Gas ignoring the commission's rules, the utility was also lying to the public Advocate's office and hiding data.

Speaker 3 [00:08:12] The utility trying to mislead or lie or hide data or information from the regulator is a violation of the Commission's rule 1.1. It's rule one for a reason is pretty important and pretty basic for being a regulated utility.

Speaker 1 [00:08:28] And that behavior rolled right on into the utility's fight against electrification. SoCal Gas was threatened by a wave of gas bans proposed in its territory. And let's be real here. These parents are a threat. While some territories have utilities that combine electricity and gas, making them less likely to protest electrification. That's not the case in Southern California. Socalgas, as its name suggests, only deals in gas. It's actually the country's largest gas utility with more than 20 million customers. And residential gas use is where most gas utilities make money. It represents about 85% of revenue for the average gas utility. Gas spans only cover new buildings. So it's not a significant part of a utility's business, but they do represent a turn away from residential gas use that equates to a major reduction in eventual revenue for utilities like SoCal Gas. Leah Stokes has spent her career tracking the role of utilities in shaping policy and particularly blocking climate policy. But it was a new experience to see it right up close in her own town. Here she is describing it on her podcast, A Matter of Degrees. They've shared the audio from their utility episode with us, and we'll be dropping that whole episode into our feed for you to listen to as well, because it's really great and it goes in directions that we will not.

Speaker 2 [00:10:01] If you live in Southern California like I do, and you have gas in your home, which I currently do, until I get my permits to remove the gas from my home. You are a captured customer of SoCal Gas. You have to pay them money. They're a monopoly utility.

Speaker 1 [00:10:15] And then in January 2021, the Santa Barbara City Council was ready to vote on a policy that would shake that monopoly stronghold. The measure we discussed at the beginning of this episode, which would mandate that new buildings had to be connected to electricity, not gas. Ms.. CLARK If you would.

Speaker 3 [00:10:34] Read that into the record. S Madam.

Speaker 1 [00:10:37] Mayor, already. Item 88 Energy Code Amendments for New Buildings. After the presentation of the policy, the City Council opened up the meeting for public comment and you probably won't be surprised at who spoke up in opposition.

Speaker 3 [00:10:55] And you hear me? Yes. Thank you. Tim Mahoney. So, Cal Gas and we are a long term energy provider in Santa Barbara, committed to working with the city and other groups to achieve the goals of reduced emissions and create a more sustainable city.

Speaker 1 [00:11:10] Yep, SoCal Gas with a seemingly green argument.

Speaker 3 [00:11:15] Let me highlight just a few important points. To successfully achieve carbon neutrality, we need carbon neutral fuels and gas infrastructure to deliver those fuels. So Socalgas is an industry leader in increasing the flow of renewable gases that can be delivered via the existing gas infrastructure.

Speaker 1 [00:11:37] There's that renewable natural gas plan. Again, we've discussed this in previous episodes, but here's Charlie Spatz from the Energy Policy Institute with a quick refresher.

Speaker 4 [00:11:48] Renewable natural gas. It's a brilliant marketing term that the gas industry has created, and essentially they're referring to biomethane.

Speaker 1 [00:11:59] The capture of methane from landfills, sewage plants or agricultural feedlots. Renewable natural gas is not really a viable way to achieve decarbonization because it could only ever supply, at most about 16% of the current demand for gas. But Spatz says the gas industry is using the idea to try to lock in gas infrastructure.

Speaker 4 [00:12:23] They are looking to provide their own solutions, which essentially mean continuing to use natural gas indefinitely. That's where we hear the term renewable natural gas come up.

Speaker 1 [00:12:38] Now back to Santa Barbara City Council, where SoCal Gas is. Local PR guy Tim Mahoney was selling renewable gas in an effort to tank the city's proposed gas ban.

Speaker 3 [00:12:49] Now, renewable natural gas is currently the only negative carbon fuel, and experts agree it is needed to decarbonize these buildings.

Speaker 1 [00:13:00] The council was not swayed by the renewable natural gas pitch and voted unanimously in favor of the gas ban that night. But they'd have to vote again in July to make it stick, which was plenty of time for that scrappy, fake citizens group, Californians for Balanced Energy Solutions, or C, for B. S to do its thing. Despite the group's efforts, though, on July 27th, 2021, Santa Barbara officially passed the ban on gas in new buildings. But the California Public Utilities Commission was just starting to look into what had happened in Santa Barbara and what SoCal Gas was doing to oppose gas bans in general. Beyond just text messages and hokey ads, the commission held another hearing, this one about building decarbonization and how utilities were handling it. Here's Mike Campbell again.

Speaker 3 [00:13:53] In the building decarbonization proceeding. There are various parties in the proceeding. We were a party. So Cal Gas was a party. Utilities were a party. And then this new organization I don't know where the C Forbes asked the commission for the right to become a party. And so Sierra Club alleged that C for B. S was not an independent party. They were a front group for SoCal Gas. We thought that was a pretty serious allegation.

Speaker 1 [00:14:23] According to Campbell, Socalgas, however, was not forthcoming with data and information, at least initially.

Speaker 3 [00:14:31] But we kept. And lo and behold, not only was SoCal Gas paying for the creation of C Forbes and was instrumental in pretty much every aspect of its operation.

Speaker 1 [00:14:45] Campbell's team also figured out who was really footing the bill for C-4 B.S., it turns out. So Carcass had taken some pretty unusual steps.

Speaker 3 [00:14:56] They had charged the costs for that to customer funded accounts.

Speaker 1 [00:15:00] It was so-called gases. Customers unwittingly funding a front group.

Speaker 3 [00:15:05] And that is not a small thing. It's very clear in commission rules that utilities may not charge their customers for lobbying. And lobbying is different than educating. So Cal Gas has tried to pretend that this was a gray area and they were just engaged in education.

Speaker 1 [00:15:27] Campbell's office investigated further to try to figure out exactly what SoCal Gas was charging customers for. When I spoke with him back in 2021, the commission had just affirmed his office's broad discovery rights, meaning they could request all sorts of documentation from SoCal Gas. Though SoCal Gas had tried to argue it didn't have to cooperate with the investigation because of First Amendment rights and attorney client privilege. The commission struck that argument down. Then in March 2022, the California Public Utilities Commission ruled in the first complaint against SoCal Gas, the one where they were cheating on the energy efficiency program. The judge slapped them with a fine of almost $10 million for that, which seems like a lot. But Campbell's office initially recommended a fine of 255 million. Socalgas did not respond to requests to speak with us for this podcast. But in the wake of this initial CPC ruling, it did release a public statement saying, quote, We hear and respect the administrative law judge's decision on this issue over the last two years. And in response to this proceeding, we have enhanced our company's accounting and oversight practices. We look forward to working with the CPC and staff on how to strengthen these efforts under new leadership. Socalgas is focused on a business strategy that is sustainable and aligned with California reaching its climate and clean air goals more quickly and more equitably. The fact that it's under new leadership is interesting, especially as the utility waits for a CPC decision about its use of customer money to fund a front group. That's it for this time. We'll keep you posted on any decisions in that SoCal Gas case. Next time, another story of the gas industry invading local politics in Southern California.

Speaker 4 [00:17:25] There was a variety of front group activity likely associated with Southern California Gas Company to bring a variety of different spokespeople, paid spokespeople, or essentially people off the street to, you know, provide a message that was oppositional to electrification.

Speaker 1 [00:17:46] They found the jobs through Indeed.com and they were actually advertised as environmental fellowship's. Drilled is an original Critical Frequency production. Our producer is Jules Bradley, our editor. This season is Jude JOFFE-BLOCK. Sound design, mixing, mastering and original music throughout this episode, including Army Theme Song by Peter Duff. Fact checking by weed and man. Our First Amendment attorney is James Wheaton, a First Amendment project. Our artwork is by Matt Fleming. And of course, the show is reported and written by me, Amy WESTERVELT. If you'd like to support our work and get access to ad free episodes and exclusive merchandise, check out our Patriot and Patriot CNN.com slash Drilled. You can also sign up for our weekly newsletter, which includes bonus episodes via Drilled podcast icon. And you can follow us on Twitter at We are Drilled or Me at Amy WESTERVELT. Please also leave us a reading or review. Wherever you're listening to really helps us find new listeners. Thanks for listening and we'll see you next time.