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A confidential agreement between the CPUC's Public Advocates Office and the Sierra Club to investigate SoCal Gas is getting pushback from two state legislators who say it goes beyond the PAO's mission.

Two state legislators are raising questions about a confidential agreement between the Sierra Club and the state's Public Advocates Office to investigate Southern California Gas Co. for allegedly using ratepayer funds to lobby against natural gas bans, saying the agreement appears to go beyond the PAO's mission.

The two lawmakers on Nov. 30 wrote the California Public Utilities Commission, expressing concern about the agreement between Sierra Club and the PAO. There are "shocking elements" in the agreement, such as the fact that it "seems to violate the stated mission" of the PAO, the letter to CPUC President Marybel Batjer from Assms. Blanco Rubio (D-San Gabriel Valley) and Jim Cooper (D-Sacramento) says.

"This stated mission is very clear with regard to what the focus of [PAO] is supposed to be but it is in conflict with what appears to be a new focus by [PAO] which is to aid the Sierra Club in their effort to seek the ban of natural gas usage in California even though it is proven to be favored by customers as a fuel source because of the affordable cost," the letter says.

The letter requests that the CPUC pull from its Dec. 3 meeting agenda an item regarding the situation. The CPUC at the meeting had been set to approve an Oct. 29 resolution by Administrative Law Judge Regina DeAngelis that would have denied a motion filed by SoCal Gas to quash a CPUC subpoena and ruled on other PAO and SoCal Gas motions in the case. The CPUC ended up pulling the item from the Dec. 3 agenda as requested in the lawmakers' letter, and it was not heard.

The PAO had launched the inquiry in May 2019 after allegations were raised in a separate proceeding regarding building decarbonization that the Californians for Balanced Energy Solutions group was being secretly funded by SoCal Gas (see CEM No. 1539). The PAO launched the inquiry after Sierra Club raised the issue in its own motion to dismiss a Californians for Balanced Energy Solutions motion for party status.

In a reply brief to DeAngelis' resolution, SoCal Gas said the activities for which discovery is being sought were shareholder-funded and have no nexus with the PAO's investigation of how ratepayer monies are being used. If the office was really interested in whether SoCal Gas inappropriately used ratepayer monies to fund political activity, it would only have to examine above-the-line accounts for which SoCal Gas generally seeks cost recovery in its general rate case, the company said.

In a separate proceeding [R13-11-005], DeAngelis proposed that the CPUC fine SoCal Gas $255 million for allegedly using ratepayer funds to oppose standards and reach codes (see CEM No. 1616). That proceeding sprang from briefs filed by the PAO and Sierra Club.

The new letter to Batjer from the two lawmakers requests the CPUC provide copies of any other common-interest agreements between the PAO and Sierra Club "or any other organization where common or conflicting interests exist including any that focus on natural gas usage in California." It also asked whether the CPUC or its executive director were aware of the Sierra Club/PAO agreement when a request for SoCal Gas' funding records were granted. The letter also requests copies of all correspondence between the PAO, Sierra Club and CPUC staff related to the matter and any documents related to the pursuit by Sierra Club of intervenor compensation, as well as other documents regarding partnerships between Sierra Club and the PAO.

"Our primary focus and reason for making the request for a hold on this matter is so we can ensure the discussion about natural gas and Southern California Gas is appropriate, transparent, and considers all factors including ratepayer interests," the lawmakers' letter says. "Our responsibility as members of the Legislature is to ensure we are forthright and fair when it comes to the establishment of energy policies impacting the 40 million diverse residents who live in the state of California." The lawmakers pointed out that the official mission of the PAO, an independent organization within the CPUC, is solely to act on behalf of utility customers and obtain the lowest possible rate for service consistent with reliable and safe service.

According to the agreement between the PAO and Sierra Club—obtained by California Energy Markets—the two organizations are investigating efforts by SoCal Gas "to perpetuate reliance on gas in buildings and whether the costs of these activities are borne by SoCalGas customers." The agreement says the PAO and Sierra Club have a "common interest"—both were granted party status in the CPUC's rulemaking regarding decarbonization [R19-01-011] (see CEM No. 1608).

Also, on Dec. 3, former CPUC member and former National Association of Regulatory Utility Commissioners Gas Committee Chairman Timothy Alan Simon wrote Batjer to express his concerns about the PAO-Sierra Club agreement.

He said the agreement is a "clear breach" of the PAO's mission and noted that the CPUC does not have jurisdiction over the independent PAO.

"I do not know when the [PAO's] mission changed from ratepayer advocate to environmental stewardship. This includes its recent activities over this reckless subpoena order [that are] well outside its purview," he said. Simon added that he expects Gov. Gavin Newsom and the Legislature to address PAO's "malfeasance."

PAO Program Manager Mike Campbell in a Dec. 4 phone interview with California Energy Markets said the agreement was only confidential in a legal sense regarding attorney-client privilege, and was provided to SoCal Gas as part of a data request. The actions by the PAO are "a basic part of utility regulation" and such agreements are very common, he said.

"This is entirely within our mission," Campbell said. He added that the PAO is trying to ferret out attempts by SoCal Gas to lobby with ratepayer funds against efforts to phase out natural gas.

"It's not surprising that [SoCal Gas is] fighting aggressively to keep this in the dark," Campbell said.

The CPUC did not respond to a request for comment as of press time.

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