After Scolding by Regulator, National Fuel Renews Campaign Against Gas Transition

State investigators accused the gas utility of “sloppiness” in managing customer funds, but took a light touch in enforcement.

Colin Kinniburgh   ·   April 1, 2024
A closeup photo of a natural gas stove flame
Regulators concluded that National Fuel had in fact committed some customer funds to lobbying — a practice that is illegal — but that it did so by accident and quickly corrected the errors when notified by the department. |

After New York Focus revealed last year that National Fuel customers’ gas bills may have been funding a lobbying campaign against banning gas, the state utility regulator launched an investigation into the company, which supplies gas to roughly 500,000 households in western New York.

In February, the Department of Public Service, or DPS, published its findings. Regulators concluded that National Fuel had in fact committed some customer funds to lobbying — a practice that is illegal — but that it did so by accident and quickly corrected the errors when notified by the department.

In the wake of the DPS investigation, National Fuel, one of the state’s largest gas-only utilities, continues to rally New Yorkers in defense of gas, while the Senate, Assembly, and governor negotiate key provisions in the budget that would accelerate a phaseout of the fossil fuel.

“National Fuel has been one of the most, if not the most, outspoken publicly, in opposition to the state’s plans,” said Jessica Azulay, program director of Alliance for a Green Economy, a climate group that has been active in utility rate cases since 2017.

On paper, New York has committed to largely phasing out fossil fuels over the next couple of decades. But the state has so far taken little concrete action to achieve that goal, and industry players have fiercely resisted the steps it has proposed. National Fuel’s campaign against electrification reached a crescendo last spring, as state lawmakers debated plans to ban gas in new buildings and to eventually ban the sale of new gas appliances for existing homes.

At the time, New York Focus found that National Fuel had led a robocall campaign prompting customers to call their state representatives and register opposition to the gas appliance phaseout. The company was also using a ratepayer-funded website, intended to promote energy efficiency programs, to invite users to send form letters to lawmakers.

DPS investigators found that National Fuel was planning to pay for some of these efforts with money coming straight from customers’ bills.

Their report outlines two ways the company planned to spend customer money on lobbying. First, it committed $225 to change a call-to-action link on the website, called Fueling Tomorrow Today, that prompted users to call and email their representatives “with one click!” Second, it allocated $76,000 to pay membership dues for 10 lobbying groups, a practice explicitly banned under state law. Those groups included the influential Business Council of New York State and the Buffalo Niagara Partnership, both of which have lobbied against gas bans.

DPS said its investigators caught these “accounting errors” before customers were actually charged — and that National Fuel’s “sloppiness” did not amount to a violation of state laws or regulations. The agency did, however, say that the company needed stricter monitoring moving forward. National Fuel has removed all direct calls-to-action from the website; it stripped one of the lobbying links five days after New York Focus first reported on it.

Utility watchdogs have praised the state for undertaking the investigation but said it was not comprehensive enough.

“It’s really good that DPS looked into it,” Azulay said. But “DPS took a pretty narrow view of what specifically constitutes lobbying.” In her view, regulators omitted some “clear-cut” instances of political advocacy that she felt crossed a line.

The site, which remains customer-funded, still includes a range of materials extolling the virtues of gas and touting the company’s preferred climate policies. A page dedicated to the state’s climate law cites political polling and state lawmakers’ voting records. The page also promotes National Fuel’s proposed hybrid heating approach — which requires natural gas — as a “more affordable and practical” alternative to full electrification.

Emails between National Fuel and DPS, obtained via a public records request, show that in 2022-23, the company paid more than $5,000 in customer revenue building and editing the page, which originally directed users to comment on the state’s draft climate plan.

DPS’s report does not cite any of these materials as examples of lobbying.

“Last we looked, there is still information that is advocacy in nature,” Azulay said. “We don’t think that ratepayers should be charged for content that is advocating the company’s positions on controversial topics like electrification.”

DPS spokesperson James Denn said, “The investigation into [National Fuel]’s website and the promotion of various issues was thorough and complete, and corrective measures and actions have been taken.”

National Fuel spokesperson Karen Merkel said the website “does not ‘criticize’ pending legislation or regulation, but rather sets forth facts.” She said, “We believe it is also our responsibility to make sure our customers are aware of Albany policymakers’ energy proposals that directly affect their utility service.”

National Fuel distinguishes the website from its ongoing lobbying campaign called “Better Plan, No Bans.” Company shareholders paid the communications firm Martin Group just under $59,000 last year to develop and manage the campaign. In its report, DPS noted that the PR campaign is protected as free speech as long as it’s not paid directly by customers.

The Martin Group’s website, though, touts the lobbying efforts and the customer-funded Fueling Tomorrow Today site — which it also built — as part of one campaign responding to the “unprecedented challenge to National Fuel’s NYS business” posed by the state’s climate law. And the firm claims a partial success: When lawmakers scrapped the gas appliance phaseout last year, the Martin Group called it “a major policy win!”

National Fuel has exploited “a supposed fine line between education and lobbying,” said Itai Vardi, research and communications manager at the utility watchdog group the Energy and Policy Institute. “They were clearly trying to mobilize the public at large to further their interests, and their interests are to fight [climate action] that will hurt their bottom line as a gas-only utility.”

A screenshot of a filing from the New York Department of Public Service featuring a script for a TV ad. The filing features a woman holding a coffee mug and the script reads, "Woman on-camera VO: I've had gas for years. And I couldn't be happier. My husband loves it too."
National Fuel customers have paid for a “cooperative advertising campaign” that helps local contractors place ads promoting natural gas, the company recently disclosed. | New York Department of Public Service

New details about National Fuel’s practices have emerged recently as the company seeks rate hikes, through a roughly yearlong process that operates much like a court case. As part of the case, the company recently disclosed that CEO Donna DeCarolis’s participation on the council tasked with fleshing out the state’s climate policy was itself funded by ratepayers. The company also disclosed that its customers have paid to help local contractors place ads promoting natural gas, as part of what the company calls a “cooperative advertising” program.

“I’ve had gas for years. And I couldn’t be happier,” read the script for one 2022 TV spot.

As debates in Albany heat up over what could be one of the state’s biggest pieces of climate legislation since the 2019 Climate Act, National Fuel and other gas utilities have launched a new volley of lobbying. This time, the industry target is the NY HEAT Act, which seeks to curb expansion of the gas system and eventually shift customers toward all-electric home heating and cooling. Governor Kathy Hochul and the Senate are both seeking to include versions of the bill in this year’s state budget, and the Assembly has signaled support for portions of it.

Since January, National Fuel has placed online ads blasting the “irresponsible” legislation, including on Facebook; in a Politico newsletter widely read by energy insiders in Albany; and on Pandora and Spotify. In late March, DeCarolis credited the campaign with generating “hundreds of emails and phone calls to the Governor’s office.”

National Fuel has also kept up its formal lobbying apparatus in Albany, paying four firms and its own employees a combined $44,000 in January and February to advance its interests, according to filings. (It is not alone: The much larger National Grid, which mainly supplies gas in New York, has also spent heavily on lobbying in opposition to key provisions of the NY HEAT Act.)

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A Facebook ad from New Yorkers for Affordable energy that states, "Let Gov. Hochul know: The Electric Slide is a wedding song... not an energy policy."
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A Facebook ad from New Yorkers for Affordable Energy in the style of "Jeopardy."
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New Yorkers for Affordable Energy, a group dominated by gas interests, launched a series of Facebook ads opposing the NY HEAT Act in March.

National Fuel also remains on the steering committee of New Yorkers for Affordable Energy, a group dominated by gas industry interests that is fighting the state’s climate plans. This month, the group launched Facebook ad campaigns warning of the dire consequences of electrification mandates.

“Governor Hochul and her radical allies want to leave YOU out in the cold!” one reads, above a photomontage of a woman shivering in a snowy forest.

Vardi, of the Energy and Policy Institute, says lawmakers need to step up restrictions on utilities to ensure that customers’ aren’t the ones footing the bill for these kinds of efforts. A bill first introduced in the Assembly last summer aims to do that, but it has yet to gain much traction.

National Fuel, for its part, says it was vindicated by DPS’s investigation.

“We cooperated fully with the DPS and anticipated that the investigation would conclude that no violations occurred,” Merkel said. “It was and remains our intention to speak freely and factually about energy issues facing New York customers.”

Colin Kinniburgh is a reporter at New York Focus, covering the state’s climate and environmental politics. Over a decade in media, he has worked in print, television, audio, and online news, and participated in fellowship programs at CUNY’s Graduate School of Journalism and… more
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