California has never met a “diversity” program it didn’t want to expand, but the state just hit a new low. The California Public Utilities Commission is now funneling $633 million in utility contracts to businesses that can prove, on paper, that the owner is gay.
City Journal published a detailed investigation Tuesday tracing exactly how the program works, and the nuts and bolts of it are something you’d expect from a parody. Businesses seeking LGBT-certification must submit a packet to the National LGBT Chamber of Commerce, including affidavit-backed letters from three people outside the company vouching for the owner’s sexual orientation or gender identity. Transgender applicants can submit a letter from a physician or therapist confirming their status. Couples trying to establish same-sex partnership can submit IVF records, adoption paperwork, or surrogacy arrangements as proof.
The program didn’t start this way. The California supplier diversity scheme goes back to 1986, when Governor George Deukmejian signed legislation requiring CPUC-regulated utilities to set contracting goals for women-owned and minority-owned businesses. That wasn’t without controversy, but at least it followed a pattern the courts had wrestled with for decades. In 2014, Jerry Brown expanded it to include LGBT-owned firms. In 2019, Gavin Newsom pushed it even further. By 2022, CPUC had fully implemented LGBT contracting quotas: 0.5 percent of procurement in 2022, 1 percent in 2023, and 1.5 percent in 2024 and going forward.
California utilities spent $43 billion on contractors in 2024. That 1.5 percent slice works out to $633 million.
For reference, these are utilities that deliver water, gas, electricity, and internet to 39 million people. The procurement decisions that drive those services are now, in part, being made based on what someone does in their private life.
Activists made sure the numbers kept climbing. A group called BuildOUT California sent a letter to CPUC alleging that “homophobia” existed “within the ranks of the utility companies.” The state’s legislative LGBTQ caucus warned that even discussing lower targets was “an insult to the LGBTQ+ community.” So the targets went up. They always do.
What’s remarkable here isn’t just the amount of money, though $633 million is a staggering sum to redirect based solely on identity. It’s the underlying logic. California is asking business owners to prove their personal sexual or gender identity using physician letters and surrogacy records so they can access government-regulated commercial benefits. That’s not inclusion. That’s an ideological litmus test with a dollar sign attached.
The entire premise is that the government should not merely be neutral in how contracts are awarded but actively tilting the field based on politically favored characteristics. Once you accept that logic, the only question is which group gets their percentage next, and who gets to decide what qualifies. California has made that decision, and handed the verification keys to a private nonprofit with its own interests.
