California is steering $633 million in utility contracts to businesses based on how gay the owner is.
Now the state is scrambling because Harmeet Dhillon read the fine print.
And what California threatens to do to business owners who fail the gay test is something the state has never had to explain out loud before.
California Built a Gay Spoils System Inside Your Utility Bill
The California Public Utilities Commission – the agency that regulates your electricity, gas, water, and phone companies – has been running a supplier diversity program for decades.
What started as a minority contracting push in 1986 quietly metastasized under a parade of Democrat governors.
Jerry Brown signed legislation in 2014 requiring CPUC to recognize LGBT-owned businesses as eligible for the contracting program.
Gavin Newsom expanded it five years later, pressuring energy companies beyond CPUC's direct oversight to play along.
By 2022, the program had official procurement "goals" – 0.5 percent from LGBT-certified businesses that year, 1 percent in 2023, and 1.5 percent in 2024 and every year after.
Based on the $43 billion California utilities spent on outside contractors in 2024, that 1.5 percent target would funnel roughly $633 million to state-certified gay businesses.
Every California ratepayer is funding it through their utility bill.
The Checklist California Sends You to Prove Your Homosexuality
Here is where this story leaves the realm of absurd and enters something darker.
Because California's gay-certification program is not self-reported.
You have to prove it.
The Supplier Clearinghouse – the group that actually verifies gay status for CPUC contracts – maintains an official document checklist.
To qualify, you can submit a letter from an LGBT organization vouching for your sexual preferences, proof that a newspaper has explicitly identified you as LGBT, or three letters from personal contacts written on company letterhead attesting to your homosexual orientation.
A physician's letter establishing LGBT status is also accepted – meaning a doctor's note to prove you are gay enough to win a government contract.
Corporate officials who falsely represent their business as gay-owned face a fine of up to $5,000, up to a year in county jail, or both.
California will literally jail you for lying about your sexual orientation to get a utility contract.
The state that lectures the rest of America about keeping government out of people's bedrooms built an official government program to audit what happens in people's bedrooms.
Dhillon Opened the Door and California Has No Answer
Christopher Rufo and Austen Hufford broke the story in City Journal on Tuesday.
By Wednesday, Harmeet Dhillon had seen enough.
The Assistant Attorney General for Civil Rights announced a formal DOJ inquiry into the California program, telling Glenn Beck she believes it is flatly illegal.
Dhillon put the question plainly: how is who somebody sleeps with relevant to their provision of utility-related support services?
She encouraged businesses that lost contracts because they lacked the right identity credentials to consider private legal action.
California voters already answered this question once before, in 1996, when they passed Proposition 209 banning state-sponsored preferential treatment based on race, sex, or ethnicity in public contracting.
CPUC spent decades engineering around that voter verdict anyway, dressing coercion up as voluntary participation while threatening companies with regulatory pressure if they fell short of the procurement targets.
Dhillon is not impressed by the packaging.
"I think this is illegal," she said, "so we're definitely looking into what can be done about it by the Department of Justice."
The CPUC spokesperson offered the standard bureaucratic non-answer – the program has existed for 40 years, it promotes competition, it benefits consumers.
It does not benefit consumers.
It inflates utility costs by steering contracts to businesses that checked identity boxes instead of offering the best price.
Dhillon said it directly: set-asides and special contracts produce inflation because people know their identity status is a commodity they can sell, because the state is forcing utilities to buy it.
There is a reason California's electricity rates are among the highest in the nation.
Programs like this one are part of the answer.
The state built a bureaucracy to certify your sexuality, issued criminal penalties for getting it wrong, and called it a diversity initiative.
Harmeet Dhillon just called it what it actually is.
Sources:
- Christopher F. Rufo and Austen Hufford, "Inside California's Gay-Certification Program," City Journal, June 16, 2026.
- Natalie Sandoval, "California Will Throw You In Jail For A Year If You Lie About Being Gay," The Daily Caller, June 17, 2026.
- "California Comes Under DOJ Scrutiny for Program Boosting Gay-Owned Contractors," The Washington Times, June 17, 2026.
- "Harmeet Dhillon Just Launched an Investigation Into CA's Gay-Contract Program," Townhall, June 18, 2026.
