The Problem
In most states, monopoly utilities are able to spend ratepayer money on political efforts that potentially harm consumers, including advocacy activities at all levels of government to block consumer and climate policies, adjudicate cases that will allow them to increase rates, and defeat pro-consumer ballot measures. Ratepayer money is also spent on image-building advertising, public relations campaigns, and to fund trade associations and nonprofits that advance the utilities’ messaging and legislative goals.
For example, audits and investigations have revealed that customers of FirstEnergy across its service territory funded at least a portion of the utility’s bribery scheme in Ohio, along with lobbying, corporate sponsorships, image-building advertisements, and other expenses. FirstEnergy orchestrated an advocacy campaign several years ago that included bribery efforts along with lobbying and advertisements to get a public bailout for the utility company’s coal and nuclear power plants. House Bill 6, the law that provided FirstEnergy and a bankrupt subsidiary with over a billion dollars in ratepayer bailouts, ultimately passed in 2019.
FirstEnergy has admitted it paid more than $64 million in bribes to convicted former Ohio House Speaker Larry Householder and indicted Public Utilities Commission of Ohio Chairman Samuel Randazzo to secure the bailouts, as well as other regulatory favors from Randazzo. The legislation is now at the center of multiple state and federal criminal cases.
Most utilities are technically prohibited from passing the costs of lobbying onto ratepayers. However, those rules typically employ a very narrow definition of lobbying. They are rarely if ever enforced, and utilities take advantage of loopholes that allow them to exclude many expenditures, such as those detailed above.
This spending not only forces consumers to subsidize political activities they may not agree with and that harm their own financial situations, but also replaces spending that could occur on necessary upkeep, maintenance, or other pro-consumer measures. For example, in Hawaii, Hawaiian Electric spent nearly twice as much on lobbying in the four years ahead of the deadly blazes that consumed the island of Maui in 2023 as it did on wildfire mitigation.
The Solution
Colorado, Maine, and Connecticut have enacted laws to regulate utility political activity and eliminate many of the avenues monopoly utilities use to funnel ratepayer money into political activities.
Among other things, the laws restrict utilities from using ratepayer money to pay dues to trade associations that lobby lawmakers, for PR efforts aimed at influencing laws or elections, or on lawyers or consultants who argue for rate increases. The laws also require significantly more public disclosure regarding how utilities spend customer money.
States should also require utilities to publicly disclose their rate case expenses — both internal and third-party — so consumers understand the resources utilities are expending fighting for higher rates, and so PUCs can excise them from rates or limit them if they do not serve customer interests.