Consumer and Environmental Advocates Call on Maryland Legislature to Pass Legislation to Restrict How Utility Companies Can Spend Ratepayer Money

ANNAPOLIS, MD — The Utility Transparency and Accountability Act (HB505 / SB682), sponsored by Delegate Charkoudian and Senator Hester, restricts how investor-owned utility companies can spend ratepayer money and establishes important transparency requirements in Maryland.

Utilities regularly request that ratepayers pay for expenses that should be charged to shareholders. This can leave ratepayers on the hook for utility spending that is not in the public interest nor necessary for the provision of safe, affordable, and reliable utility service.

Utilities engage in political spending via campaign contributions, lobbying local and state officials on legislation, advertising and public relations, and paying dues to trade associations like the American Gas Association and Edison Electric Institute.

“As state-granted monopolies, for-profit utilities hold a unique position in which the state has direct control over how much profit they are authorized to deliver to their shareholders,” explained Maryland PIRG Director Emily Scarr. “This dynamic makes utilities’ political dealings more vulnerable to corruption or the perception of corruption in the public’s eye. It’s therefore of utmost importance to establish clear guidelines and robust transparency for utility activities that are designed to influence the actions of decision-makers and public opinion. These activities should also not be on the ratepayers’ dime.”

Three other states – Connecticut, Colorado, and Maine – have already passed similar reform legislation over the past year, and similar bills are under consideration in Arizona, California, Illinois, New York, Ohio, Utah, and Virginia.

“In the wake of corruption scandals involving for-profit utilities, this legislation will add Maryland to the growing list of states taking action to protect utility customers,” said Matt Kasper, Deputy Director of the Energy and Policy Institute, a national utility watchdog organization. “The transparency requirements in this legislation will provide stakeholders the necessary information to hold utilities accountable and ensure they aren’t working against emission reduction goals.”

Maryland law already bars utility companies from charging ratepayers for their direct lobbying efforts, but the law needs to be strengthened and clarified to close loopholes and provide more protections for ratepayers. Under the Utility Transparency and Accountability Act, investor-owned utility companies in Maryland would be required to:

• Stop using ratepayer dollars for lobbying and other attempts to influence public opinion and elected officials and appointees; trade association dues; advertising; board member expenses; and gifts.
• Submit an annual report outlining all expenses related to these activities, increasing transparency and equipping regulators with the information necessary to enforce the law.

“For decades, utilities in Maryland have circumvented the prohibition against using ratepayer money to lobby by having their trade association lobby for them,” said Susan Miller, Clean Energy Attorney with Earthjustice. “This bill will close that loophole and protect ratepayers from having their own funds used against their interests.”

In addition, this legislation would require all utilities to be part of a regional transmission organization (RTO) and to make all RTO votes cast by utility companies public. RTOs are important bodies to help coordinate electricity generation and transmission across state lines. Maryland is one of 13 states and D.C. served by the largest RTO in the US, known as PJM.

Supporters say the Utility Transparency and Accountability Act is vital to protecting ratepayers and ensuring Maryland meets its climate goals, as Maryland ratepayers have faced numerous rate hikes in recent years and utility companies have consistently sought to block renewable energy policies.

“From charging ratepayers for dues to fossil fuel organizations like the American Gas Association to lobbying against policies that are necessary to meet the state’s climate goals, investor-owned utilities are too often part of the problem instead of the solution when it comes to the climate crisis,” said Taylor Smith-Hams, US Senior Organizer with 350.org. “Reining in utility spending and increasing accountability is vital to building a just transition to clean energy.”

See this sign-on testimony for a full list of supporters and more information about why this bill is necessary to protect ratepayers and advance Maryland’s climate goals.

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