AGA uses millions of dollars from utility customers to promote a fossil fuel agenda

The American Gas Association (AGA) is the trade association for more than 200 companies that deliver fossil gas throughout the United States. AGA’s mission is to ensure the continuation of gas delivery to homes and businesses for the members it represents. According to the latest publicly available tax documents, AGA’s revenue in 2019 and 2020 was $36 million and $30.2 million. An overwhelming majority of this revenue comes from dues paid by individual member companies, including gas utilities that are in turn recovering these fees from their millions of residential, commercial and industrial customers.

The trade association exerts influence by advocating for the gas industry with federal government officials, state utility regulators, investors, building code officials, and environmental regulators. Often the priorities of AGA and the companies it represents run contrary to the interest of its members’ captive ratepayers who are unknowingly footing the bill for AGA’s membership fees via their own utility bills.

For instance, AGA is helping its member utilities undermine environmental opposition to fossil fuel infrastructure development, which is now more costly than competing technologies in many areas of the country. The trade association has created “branding and advertising campaigns” with the goal of “reaching key influencers and decision-makers in the federal arena, and in local areas as needed…” AGA also actively works with “reporters and media outlets to position the association and industry positively in the media.” Furthermore, AGA recently ran ad campaigns that hired YouTube and Instagram “influencers” to promote gas to a general audience of potentially 1.3 million viewers likely to improve public perceptions of cooking with gas after years of research has shown that pollutants released by gas stoves have negative health effects.

These examples and many other AGA activities are not in the interest of ratepayers. 

AGA’s narrow definition of lobbying

AGA annually informs its member companies the portion of the dues that are allocable to lobbying, which is not typically included in revenue requests utilities file in rate case applications.

YearDisclosed Lobbying Allocation
20176.4%
20183.1%
20193.5%
20206.2%
20213.8%
20225.1%
Average4.70%

Between 2017 and 2022, AGA disclosed an average of 4.7% of their membership dues as allocable to lobbying. AGA relies on the narrowest possible definition of lobbying from the Internal Revenue Service (IRS). Assuming that AGA correctly identified all lobbying activities for the purposes, it does not cover the full scope of political work that the trade association engages in. In fact, in a filing in a Federal Energy Regulatory Commission (FERC) docket specifically about trade association dues, AGA itself explained, “While lobbying is a form of advocacy, not all advocacy is lobbying…” It is because of the narrow legal definition of lobbying that more two dozen environmental, climate, clean energy, and consumer advocates filed comments to FERC in support of accounting changes for the utility industry that would make it more difficult for utilities to force their customers to pay for their memberships in trade associations that exist to advocate for the utilities’ political agenda.

Consumer advocates and other rate case intervenors, including staff at the Public Utilities Commission of Nevada, have explained that a more appropriate and comprehensive definition of lobbying is found in the Uniform System of Accounts’ (“USofA”)” definition for Account 426.4, which specifically applies to regulated utilities. By choosing the less comprehensive IRS lobbying definition, AGA and its member utilities are effectively undercounting the percentage of lobbying and political spending that would otherwise be prohibited from ratepayer recovery under USofA’s definition. 

AGA’s expense categories

Many of AGA’s activities are not in the interest of ratepayers. Internal AGA budget documents detail categories of activities undertaken by AGA that are not in the public interest and should not be recovered from ratepayers. 

Expense Category (click for AGA descriptions)2020*20192018**2017Average: 2017-20
Operations and Engineering15.95%22.32%18.38%18.24%18.72%
Governmental Affairs and Public Policy14.36%11.86%10.78%10.28%11.82%
Energy Markets, Analysis, and Standards13.06%10.75%12.86%12.78%12.36%
Communications8.98%9.11%13.06%18.51%12.41%
Corporate Affairs and International11.12%13.85%12.95%11.76%12.42%
General Counsel and Federal Regulatory Affairs8.18%7.50%7.59%7.77%7.76%
Industry Finance and Administrative Programs3.16%3.50%3.30%3.22%3.30%
Political Action Committee0.51%0.49%0.55%0.52%
General Administration25.18%20.61%20.58%16.91%20.82%
*Forecast expenses from 11/23/20**World Gas Conference expenses removed from calculation

Internal AGA budgetary records from 2017 through 2020, including several official audits, reveal spending levels far exceeding the allocable lobbying percentages disclosed annually by AGA. For example, between 2017 and 2020 AGA spent an average of 11.8% of its budget on an expense category described as “Government Affairs and Public Policy” compared to 4.8% on IRS defined lobbying over the same period. AGA describes the work of the Government Affairs and Public Policy as “formulating and implementing AGA’s legislative strategies to accomplish the advocacy priorities biennially identified by the membership and approved by the AGA Board of Directors.” 

Eight other expense categories created by AGA also highlight expenses that likely lack few, if any, ratepayer benefit. Despite generic category names like “Communications” and “Corporate Affairs,” internal AGA descriptions reveal millions in annual spending that falls outside the IRS definition of lobbying, but would fall under the USofA’s definition and therefore be prohibited from ratepayer recovery. 

Expense Category Descriptions

Documents from AGA’s October 2019 Finance Committee Meeting provide expense category descriptions and examples of each category’s work product. Below we provide highlights and excerpts from each expense category. 

Operations and Engineering

Description: “[T]his section works to successfully advocate the positions of natural gas utilities in response to proposed legislation and regulations by DOT, EPA, DHS, and DOE as well as directives from the Administration.”

Specific Efforts: “We anticipate continued significant advocacy and membership education efforts, which will entail travel to National Association of Pipeline Safety Representative meetings, National Association of Regulatory Utility Commissioners conferences, regional gas association events, government workshops, the Pipeline Safety Trust conference, etc. Technical analysis will be performed and publications will be developed to support our advocacy and education efforts.”

Governmental Affairs and Public Policy

Description: “The Governmental Affairs and Public Policy (GAPP) Group performs the functions of formulating and implementing AGA’s legislative strategies to accomplish the advocacy priorities biennially identified by the membership and approved by the AGA Board of Directors.”

Specific Efforts:

  • “[E]ducate the Executive branch of government, Members of Congress, Congressional staff, legislators and regulators and their staff, opinion leaders, and the media regarding the environmental and economic benefits of the increased direct use of natural gas.”
  • “[P]romote each of AGA’s advocacy priorities among state policymakers including, but not limited to, governors, attorneys general, state legislators, state energy officials, and public utility commissioners.”
  • “State Affairs continues to work with state legislative organizations such as the National Conference of State Legislatures (NCSL), Council of State Governments (CSG), American Legislative Exchange Council (ALEC), Legislative Energy Horizon Institute (LEHI), and GOPAC on education and outreach opportunities.”
  • “GAPP staff has had an increasing role in engaging with municipal bans on natural gas in new buildings and we see this role continuing and expanding in 2020.”

Energy Markets, Analysis, and Standards

Description:

  • Energy Markets provides insight and analysis on emerging government policies and actions that have the potential of impacting natural gas distribution companies and their customers. Staff in this department are tasked with building relationships with key stakeholder groups, federal agencies and policy influencers to enable AGA and its members to be part of energy policy discussions which contributes to AGA’s policy development process.
  • “Energy Analysis provides analytical and management support to key areas of focus, including natural gas market fundamentals, local gas utility operations, and financial performance, general industry data, regulatory influences, critical gas supply/demand developments, winter heating season planning, energy efficiency, greenhouse gas emissions, and other environmental issues. This budget includes funding for the analysis and dissemination of industry information and data, with a focus on studies that provide member companies with information to benchmark their commercial and operational performance, as well as their regulatory obligations.
  • “Codes & Standards is the association’s resource that often flags issues and rule-makings that could impact natural gas LDC’s, then helps to draft comments and replies to government and regulatory entities as notices of proposed rulemakings are published. The primary goal of Codes & Standards is to retain the option of placing a natural gas appliance in homes and businesses.

Specific Efforts:

  • “The 2020 budget for Energy Markets includes funding for external resources utilized to help evaluate trends that shape the expectations of energy consumers, engaging key stakeholders and policymakers and the development of studies and joint initiatives that support advancing the industry’s advocacy priorities relating to the role of natural gas in a sustainable energy future.”
  • “The budget [for Energy Markets] also includes funding for planning and executing meetings of the Natural Gas Direct-Use Technology Development Workshop and the Sustainable Growth Committee.”
  • “AGA’s Codes & Standards group is actively engaged in domestic and international codes development and retains a place in the international community on questions of gas quality and the progress of liquefied natural gas issues.”

Communications

Description: “The AGA Communications department supports the advocacy goals of the Association and its members through communicating key messages and data with key audiences, emphasizing the role of natural gas as the clean and reliable foundation fuel for America’s economy, energy and national security, and as a clean, reliable choice for consumers. We work to educate and influence targeted media outlets and key influencers about natural gas as a vital and sustainable energy source.”

Specific Efforts:

  • “The department works across the organization to track federal and state issues, and we work with reporters and media outlets to position the association and industry positively in the media.”
  • “[T]he Communications department leads the branding and advertising campaigns targeted at key audiences in Washington, DC, with the goal of reaching key influencers and decision-makers in the federal arena, and in local areas as needed, to build industry awareness that will help when AGA member companies are working with these policymakers on local issues.”

Corporate Affairs and International

Description: “Corporate Affairs budget includes funding to provide opportunities for interaction between AGA member companies and all segments of the financial community. The focus of this initiative is to promote interest in the investment opportunities in the industry.”

Specific efforts:

  • “This section includes funding for member outreach, NARUC financial outreach, and activities of the meeting services department.”
  • “Funding for support of the Chair, the Board of Directors, and the Leadership Council is also included in the Corporate Affairs budget.”

Description: “International Activities budget includes continued funding for AGA’s engagement with international members and the International Gas Union (IGU) now that we are in the official role of past president and still serve as the U.S. representative for the IGU.”

General Counsel and Federal Regulatory Affairs

Description: The Office of General Counsel’s (OGC) budget includes: “funding for activities helping to increase safety and protect the natural gas industry from adverse federal regulations; costs associated with amicus curiae and other briefs filed by AGA related to LDC industry-wide issues in the U.S. Supreme Court and federal appellate courts; legal compliance programs; and other legal matters and activities at the direction of the AGA Board, AGA Legal Committee, the General Counsel and the CEO.”

Specific Efforts:

  • “[F]unding for the FERC Regulatory Committee supporting member advocacy priorities before FERC and the CFTC, advocacy efforts before DOE and FTC regarding minimum efficiency standards and labels associated with natural gas appliances, advocacy efforts before the North American Energy Standards Board in developing business practice standards, and collaborative efforts with the Natural Gas Council and other associations.”
  • “[F]unding covers continued negotiations and monitoring of pending challenges to regulations under the Clean Air Act, and regulations mandating greenhouse gas reporting for natural gas transmission, storage, LNG facilities and distribution. This budget would also include possible representation from outside counsel through a multi-industry coalition to support streamlined nationwide wetlands permitting for natural gas infrastructure projects.”
  • “The program also includes funding for technical environmental engineering consultants to assist with advocacy on natural gas emissions issues, the EPA greenhouse gas reporting rules, EPA’s Greenhouse Gas Emissions Inventory, and EPA’s plans to revise the PCB rules. In addition, the program includes funding for projects to collect methane emissions data for natural gas distribution equipment.”
  • “The 2020 budget increase of $110,000 is primarily due to an anticipated increase of $152,000 in using outside legal services. Use of outside counsel may increase as AGA and members determine how and when to best respond to increasing federal, state and municipal challenges to infrastructure development and the use of natural gas.”

Industry Finance and Administrative Programs

Description: “This grouping includes funding for a wide range of member services in such areas as industry accounting, taxation, internal audit, risk management, human resources, compensation, labor relations, customer activities, and information technology programs. A number of these programs, including several committees, are performed jointly with EEI. Through the Accounting Advisory Council, this section also supports advocacy efforts on behalf of the membership with the FASB, IASB, IRS, NARUC, SEC, PCAOB and the Treasury Department.”

General Administration

Description: “The General & Administration budget includes funding for the activities of the President’s Office, Finance and Administration (F&A), and Human Resources (HR).”

Posted by Energy and Policy Institute