How to Get Corrupt Utility Money Out of Politics
Your bills subsidize monopoly utility lobbying.
This is Boondoggle, the newsletter about corporations ripping off our states, cities, and communities. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!
*Editor’s note: My organization, the American Economic Liberties Project, is hiring! Give me a shout if you or someone you know would be a good fit.*
In late July, New York Assemblymember Michaelle Solages released new legislation, which will be considered next year, that would prevent utility corporations in the Empire State from spending the money they collect from customers on corporate lobbying efforts. The bill follows reports that one of the state’s gas utilities, National Fuel, used customer money to lobby against electrification mandates.
The next week, Florida Congresswoman Kathy Castor released a similar bill at the federal level. It directs the Federal Energy Regulatory Commission (FERC) to ban utilities from using customer money to engage in lobbying activities. Castor’s legislation was inspired by a scandal in her state, where the largest electric utility, Florida Power and Light, engaged in a host of sketchy activities, including backing fake “ghost candidates” who were not actually running, in order to influence elections.
These two bills are part of a wider and much needed movement to get corrupt utility money out of the political process. Across the country, lawmakers are stepping up to ensure that monopoly utilities — those corporations that deliver electricity, gas, water, and the like — can’t make their captured customers pay for political activities, including those that allow the utilities to argue for rate increases.
Utilities occupy a unique space in the American economy. Most are what’s known as “investor owned,” meaning they are for-profit corporations owned by either private concerns or that issue public stock. But they are usually state-granted monopolies at the same time, distinct from those corporations that operate in an open market with other competitors. Utilities are granted these monopolies because it wouldn’t be a good use of time or resources — but would be a giant hassle for local residents — for there to be competing power lines, water pipes, or gas lines in a particular area.
In exchange for exclusive or near-exclusive rights to sell in a certain location, utilities are, in theory, tightly regulated, and usually report to some sort of public body that has oversight over what they charge, how they operate, and how much of a profit they are allowed to make.
But because utilities are still standalone corporations with a profit motive, they can also engage in the political process. So their leaders regularly direct them to make campaign contributions and lobby regulators, state legislatures, governors, or other state or federal agencies, to change, relax, or eliminate the rules they have to follow. And monopoly utility corporations often use the money customers pay — referred to as ratepayer money — to cover the costs of that lobbying.
In addition to the examples above from New York and Florida, there are documented instances of utilities in Ohio, Illinois, Maine using ratepayer money to lobby their regulators for changes that would harm those very customers, to argue for bailouts at customer expense, and to work to ensure that both lawmakers and regulators sympathetic to their interests wind up in office. In Hawaii, Hawaiian Electric spent nearly twice as much on lobbying between 2019 and today as it did on wildfire mitigation ahead of the deadly blazes that consumed the island of Maui recently. There are surely many more horror stories out there.
Because customers usually have no choice but to pay a specific utility corporation if they want service — because those corporations are explicitly set up to be monopolies! — they essentially have to subsidize this political behavior, even though many customers, if not most of them, likely disagree with goals at which those lobbying efforts are aimed.
As David Pomerantz of the Energy and Policy Institute wrote, “State regulators are supposed to make sure that customers’ monthly utility bills cover only the cost of delivering electricity or gas and to set limits on how much utilities can profit. But large investor-owned utilities, with legions of lawyers to help them evade scrutiny, bake many of their political costs into rates right alongside their investments in electrical poles and wires.”
While many states attempt to regulate the ways in which utilities spend customer money to influence the political process, those rules are full of loopholes. For example, in 2012 New York passed a law that prevents utilities from using ratepayer money for lobbying, but it doesn’t explicitly cover so-called “grassroots lobbying,” which means efforts to get ordinary citizens to influence the political process. (TV commercials saying “Call your member of Congress to demand X” are an example of grassroots lobbying.) The bill I mentioned in the intro to this piece would eliminate that loophole.
During their most recent state legislative session, lawmakers in Colorado, Maine, and Connecticut passed new laws to regulate utility political activity that are much more comprehensive than what is on the books elsewhere. Among other things, those 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 what utilities are spending their lobbying money on.
Those laws are an effort to get at the panoply of ways in which utilities can influence how the legislative and regulatory sausage gets made, and ultimately, what customers are forced to cough up for their monthly bills.
Legislation isn’t the only road to accomplishing these kind of changes. In Michigan, for example, Attorney General Dana Nessel has been pushing the state’s utility regulator to disclose more about how utilities spend money on lobbying. “Utilities are government-created monopolies regulated by the state,” Nessel said. “Accordingly, customers of these monopolies should have the right to know whether and how much their utility is spending to influence legislation or other public policy that impacts the utility and consumers.” In Massachusetts, advocates are pushing for their state’s regulator to do the same.
Of course, money is fungible, so these laws don’t ultimately stop utility from attempting to capture the political process or buy particular people’s way into office. But at the very least, lawmakers and regulators should be ensuring that we, as customers, aren’t captive to paying for their political activities directly, especially when the aim of those political activities is to get us to pay even more on our monthly bills. It’s great to see that three states moved on this in 2023, and it’d be even better to see a much longer list do the same in 2024.
SHAMELESS SELF-PROMOTION: I wrote a piece for the Minnesota Reformer about how Minnesota lawmakers stopped a harmful hospital merger and what other states can learn from their success. You can read it here.
I also adapted my recent newsletter on how states can challenge PBMs into a piece for the Orlando Sentinel. You can read it here if you’re a Sentinel subscriber.
Finally, I appeared on the Techtonic radio show, hosted by Mark Hurst, to talk about the many ways Amazon uses secret deals to harm communities. You can give the episode a listen here.
Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.
If you don’t subscribe already and you’d like to sign up, just click below.
Thanks again!
— Pat Garofalo