A City Journal report highlighted California’s certification process for LGBT-owned firms, prompting CPUC to say certified status does not guarantee contracts or preferential treatment.
California’s utility regulator is defending its supplier diversity program after a June 16 City Journal report scrutinized how the California Public Utilities Commission sets procurement goals for certified LGBT-owned businesses that contract with regulated utilities. The program applies in California and is tied to utilities’ annual purchasing plans for contractors, vendors and service providers.
City Journal highlighted Red Ace Technology Solutions owner Mary Ann Horton, whose company was certified as both woman-owned and LGBT-owned and later did cybersecurity work for San Diego Gas & Electric.
“If I was a straight, white male, I might be concerned I don’t have the same opportunity,” Horton told City Journal. “It worked out great for me.”
The CPUC’s General Order 156 program includes procurement reporting for businesses owned by women, minorities, LGBT people, disabled veterans and people with disabilities. The commission says the program is meant to “encourage” utilities and covered energy and telecommunications companies to include diverse firms in procurement.
The LGBT business goal was formally ramped up after a 2022 CPUC decision: 0.5% in 2022, 1% in 2023 and 1.5% in 2024. At the time, CPUC Commissioner Clifford Rechtschaffen said the change would expand economic opportunities.
“This Decision furthers the economic well-being of the state,” Rechtschaffen said in the CPUC’s 2022 announcement.
City Journal reported that if large CPUC-regulated utilities met the 1.5% goal in 2024, the spending total would amount to roughly $633 million going to LGBT-owned firms. CPUC’s 2025 report to the Legislature showed utilities instead reported $56.6 million in LGBT business enterprise spending in 2024, or 0.13% of procurement, below the 1.5% goal.
The same CPUC report said large utilities’ procurement from LGBT-owned businesses decreased 5% in 2024, from $42.1 million to $40 million. The commission also reported 2024 procurement of $8 billion from minority-owned firms, $4 billion from women-owned firms and $980.3 million from disabled veteran-owned firms.
CPUC pushed back in a June 22 statement, saying criticism that the program requires preferences or guarantees contracts is inaccurate.
“This is 100 percent wrong,” the commission said.
The commission said General Order 156 “forbids utilities from using set-asides, preferences, or quotas” and said utilities still select vendors based on “business needs, technical qualifications, pricing, reliability, safety, and performance.”
Certification is handled through the Supplier Clearinghouse, which says an LGBT business enterprise must be at least 51% owned by LGBT individuals and controlled in daily operations by those individuals. The Supplier Clearinghouse says certification gives firms added exposure to utilities.
“Promotion and visibility to the CPUC and 16 major utility companies,” the clearinghouse says.
The Supplier Clearinghouse document list says LGBT applicants can submit records including a marriage or domestic partnership certificate, a letter from an LGBT organization, media coverage identifying the applicant as LGBT, a physician letter, legal name or gender change documentation, or three letters from personal contacts on company letterhead.
The LGBT supplier category traces to AB 1678, a 2014 California law that extended utility supplier diversity provisions to LGBT business enterprises and included criminal penalties for false representation. A later law, SB 255, expanded supplier diversity reporting to additional energy-sector entities, including community choice aggregators and electric service providers.
The debate comes against the backdrop of Proposition 209, the 1996 voter-approved ban on preferential treatment in public employment, education and contracting based on race, sex, color, ethnicity or national origin. Voters rejected Proposition 16, an effort to repeal that ban, in 2020.
