Senate Democrats on Capitol Hill are encouraging the Federal Trade Commission (FTC) to investigate vertically integrated electric utilities for abusing their monopoly power and hindering the transition to clean energy.
In a February 6 letter to FTC Chair Lina Khan, the group of senators argued that monopoly utilities have engaged in “questionable practices” to stifle competition and undercut technologies such as rooftop solar, threatening the successful implementation of President Biden’s landmark Inflation Reduction Act. The letter is signed by Senators Sheldon Whitehouse (D-R.I.), John Hickenlooper (D-Colo.), Chris Van Hollen (D-Md.), and Elizabeth Warren (D-Mass.).
“Competition is still the best way to ensure that our electric grid is built out in a way that lowers rates, increases innovation, and improves sustainability and resiliency.”
The senators point out that the electricity industry is undergoing the most transformational shift since its creation. Consumers increasingly want choice, states are establishing robust renewable electricity targets, and clean technologies and services are multiplying and undercutting the cost of incumbent fuel providers. These trends threaten the 100-year-old utility business model predicated on increasing consumer demand and utility capital expenditures. Some utilities, the letter states, have responded by engaging in questionable practices to subvert these trends in the interest of protecting their profits over the pockets of their customers, harming poor communities and communities of color in particular.
“These utility practices stifle clean energy competition, thus threatening the successful implementation of President Biden’s landmark Inflation Reduction Act," – U.S. Senators John Hickenlooper, Sheldon Whitehouse, Chris Van Hollen, and Elizabeth Warren.
The letter cites recent controversies involving several investor-owned utilities, including FirstEnergy’s payment of millions of dollars in bribes to a former Ohio lawmaker to help pass a 2019 state law that benefitted the company’s nuclear and coal plants. FirstEnergy paid a $230 million fine as part of a deferred prosecution agreement with the Department of Justice and admitted its role in the scheme. The senators also singled out Florida Power & Light (FPL), a NextEra subsidiary and Florida’s largest utility, for engaging repeatedly in tactics to sway elections and undercut distributed solar deployment in the state, and Arizona’s largest utility, Arizona Public Service (APS) for bankrolling political campaigns, dark money groups, and candidates who would oppose renewable energy.
The FTC is uniquely positioned to investigate these abuses, the letter states. The FTC is an independent agency helmed by a five-person commission, with a mission of protecting consumers and safeguarding against anti-competitive business practices. The commission has broad power to investigate industries that may be violating antitrust laws or blocking competition.
“Some utilities have responded by engaging in questionable practices to subvert these trends in the interest of protecting their profits over the pockets of their customers, harming poor communities and communities of color in particular,” the senators wrote. “We believe these disturbing anti-competitive and anti-democratic incidents merit an FTC investigation.”
The senators said they agree with a recent statement by Elizabeth Wilkins, Director of FTC’s Office of Policy Planning that “Competition is still the best way to ensure that our electric grid is built out in a way that lowers rates, increases innovation, and improves sustainability and resiliency.”
Read the full letter here.
The senators’ letter supports a petition submitted to the FTC in May 2022 by more than 230 environmental and anti-monopoly groups accusing investor-owned utilities of using their monopoly status to limit distributed energy development, manipulate transmission projects, and use questionable lobbying tactics to stack the regulatory process in their favor.
“Many utilities are unfairly using their monopoly status as franchised operators to manipulate transmission projects, limit distributed energy development, and inappropriately tilt the overall regulatory process to their favor,” the petition said.
An FTC investigation of monopoly electric utilities would not be unprecedented. Over 90 years ago, the commission investigated electric utilities following “massive consolidation” within the industry that resulted in “rampant consumer abuse, corruption, and an unrelenting utility campaign against public power competitors,” the petition said. The commission’s seven-year investigation resulted in passage of the Public Utility Holding Company Act of 1935, which granted regulatory authorities to the Securities and Exchange Commission over the utility industry.