The California Public Utilities Commission (CPUC) runs a procurement preference program for businesses owned by lesbian, gay, bisexual, or transgender individuals, operating under General Order 156. A business qualifies as an LGBT Business Enterprise if it is at least 51 percent owned and controlled by LGBT individuals.
In California, “utilities” are privately owned companies that hold near-monopolies delivering essential services such as electricity, natural gas, water, or internet and phone service, and are therefore regulated by the state through the CPUC. To operate, utilities purchase goods and services from outside vendors, construction, engineering, fuel, IT, and similar services.
Under CPUC’s Supplier Diversity Program, utilities are given goals for directing a share of that vendor spending to certified women-, minority-, disabled-veteran-, and LGBT-owned businesses, giving LGBT-certified firms a procurement advantage in competing for utility contracts.
There are both indirect and procedural incentives for utility compliance with CPUC’s LGBT procurement goals. The CPUC controls matters that are consequential to utilities, including rate approvals, infrastructure proceedings, and merger approvals.
One example is the Verizon-Frontier merger. A CPUC administrative law judge recommended approval of the $20 billion deal only if new diversity conditions were attached. This recommendation came even after Verizon had already committed to the FCC to eliminate its workforce and supplier-diversity goals.
Utilities that resist these procurement goals risk creating friction in these higher-stakes proceedings.
Compliance is also reinforced through reporting requirements. Utilities must file annual plans, collect demographic data on vendors, and explain in writing any shortfall against the stated goals.
Certified firms enter a supplier database administered by the Supplier Clearinghouse and used by participating utilities for procurement decisions, with certification valid for three years. CPUC’s category-specific contracting goals now stand at 15 percent for minority-owned firms, 5 percent for women-owned firms, 1.5 percent for disabled-veteran-owned firms, and 1.5 percent for LGBT-owned firms.
The LGBT category sits within a broader supplier-diversity framework dating to 1986, when Governor George Deukmejian signed Assembly Bill 3678, requiring CPUC-regulated utilities to submit annual plans for purchasing from woman- and minority-owned companies; CPUC created its Supplier Diversity Program two years later to enforce the law and set contracting goals. In September 2014, Governor Jerry Brown signed legislation requiring CPUC to recognize LGBT-owned businesses as eligible for supplier-diversity benefits, and the CPUC added LGBT businesses to General Order 156 the following year.
Governor Newsom expanded the program in 2019, encouraging energy-sector companies to award contracts to gay-owned firms. The LGBT procurement target phased in at 0.5 percent in 2022 and 1 percent in 2023, reaching the current 1.5 percent goal by unanimous CPUC vote in April 2022. During the rollout, advocacy groups pushed CPUC toward fuller implementation.
BuildOUT California, an LGBT building-industry organization since rebranded, told the commission that homophobia persisted within utility companies’ ranks, and the state legislature’s LGBTQ caucus wrote in 2021 that lowering gay-procurement targets would insult the LGBTQ+ community.
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