Monopoly Utilities Ousted America's Best Regulator

Bummer news for utility bills.

Photo credit: gerry_btr

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Perhaps the best utility regulator in the country is Connecticut’s Marissa Gillett, who chairs the state’s Public Utilities Regulatory Authority (PURA) — until she steps down on October 10, a resignation she announced late last week.

Gillett’s resignation came after a brutal, years-long campaign by Connecticut’s monopoly utilities to knock her out of office. Under her tenure, PURA faced a wave of lawsuits, lobbying pressure, public records fishing expeditions, and general political unpleasantness, all because Gillett had the audacity to do what utility regulators are supposed to do: Assess whether utilities are serving the public interest in exchange for their monopoly power.

That Gillett was forced from office is a grim sign for both public accountability in the utility space, generally, and for the pocketbooks of Connecticut households specifically. It’s worth explaining what, exactly, Gillett did that so upset the status quo in the Nutmeg State, because having succeeded in ousting her, monopoly utilities will certainly use the same playbook anywhere else regulators dare to challenge their outsized power.

Across the country, utility costs, and especially those for electricity, are skyrocketing. Just this year, natural gas and electricity bills have risen by 13.8 and 6.2 percent, respectively. And that’s part of a longer trend: The nation’s average electricity rate today is 40 percent higher than it was in 2019.

This chart sums up the situation nicely.

The pain also isn’t peaking anytime soon: Monopoly utilities have requested a record-setting $29 billion in rate hikes so far in 2025.

Much of the press coverage about these rising costs has pointed to a few culprits, chief among them the proliferation of data centers across the country and cuts to various energy programs made by the recent federal budget, aka the “One Big Beautiful Bill.”

While those factors have certainly played a role — regular readers know there is no love lost between myself and the data center industrial complex — perhaps the most important factor behind the run-up in utility costs is the comically simple reality that monopoly utilities keep asking for unreasonable rate increases, and regulators keep blessing them.

Backing up for a moment, utility rates are determined by a process known as a rate case, wherein a utility — be it water, gas, or electric — asks regulators for a certain rate, i.e., how much profit it can make, and thus how much it can charge customers. Due to their position as natural monopolies, utilities are supposed to only charge enough to cover the cost of providing service, plus a “reasonable” profit. Other parties, including state attorneys general, public advocates, or concerned residents or businesses, depending on the state, can “intervene” in rate cases, often to argue that the utility’s request is too high.

At best, rate cases are opaque and very expensive, requiring the hiring of expensive financial experts and consultants to argue about a slew of financial models. Most Americans say, understandably, that they don’t know what goes into calculating the cost of their utility bills.

At the conclusion of the case, regulators grant the utility the power to charge a certain amount and make a specific amount of profit, which turns into the individual bills we all play. And though there is ample precedent and real-world experience showing where regulators should be pegging rates in order to fulfill their mandate to protect the public and preserve service and a “reasonable” profit for the utilities, they keep blowing right past “reasonable” into total absurdity.

One estimate shows that monopoly utilities have been allowed to overcharge customers by about $5 billion per year for the last 30 years. In the last three years alone, price hikes at investor-owned electric utilities outpaced inflation by 49 percent. A 2019 study of U.S. utilities found that for years regulators have been increasing the amount of return they allow utilities to make, “highlighting a disconnect between what regulators claim to be doing and what they are actually doing.”

(To be clear, I’m writing about investor-owned-utilities here, known as IOUs, which are, as the name says, owned by outside investors despite their very public role, and which service the vast majority of utility customers. They are distinct from publicly owned utilities, which are owned outright by states or municipalities, and which have not imposed anywhere near the amount of rate hikes their IOU cousins have.)

This continual deference by regulators unnecessarily picks the pocket of utility customers, and creates perverse incentives for utility corporations to overspend and overbuild, because they can bake all that spending into rates and profit off their unneeded expenditures.

Why do regulators do this? There’s no one, simple answer, of course, but it’s a combination of incompetence, corruption, and the knowledge that getting onto a utility regulatory board requires either being elected (usually thanks to utility money) or appointed (by another politicians beholden to utility interests).

It’s a corrupt system that has allowed utilities to raise rates with near impunity.

The great sin Marissa Gillett committed in Connecticut was that she didn’t go along with the scam. She consistently refused to approve the rate hikes requested by Connecticut utilities, and in one instance actually lowered rates for natural gas customers, decreasing the amount of profit two of the state’s natural gas providers could claim year over year. At a moment when cost of living is atop the political agenda, Gillett was one of the rare members of government clearly and directly using her power to do something about it.

Gillett also implemented so-called “performance based regulation,” making Connecticut one of the first states to implement a system of providing financial incentives to utilities for accomplishing certain public goals — and penalizing them if they don’t.

“It’s been obvious [the utilities] were very threatened by the performance-based review,” said Tom Swan, the executive director of the Connecticut Citizen Action Group.

Thus, the campaign to hound her from office and make it functionally impossible for her to do her job effectively. She surely was not helped by a press corps that was seemingly required to include the words “embattled” or “controversial” in every single assertion about her or her tenure.

“While I have never shied away from principled disagreement, the escalation of disputes into a cycle of lawsuits and press statements pulls attention and resources away from what matters most: keeping rates just and reasonable, improving service, and planning a resilient, reliable energy future,” Gillett said in her resignation letter. “It has also exacted a real emotional toll both for me personally, as well as my family, and for my team. I did not make this decision lightly, but there is only so much that one individual can reasonably endure, or ask of their family, while doing their best to serve our state.”

In an era of cartoonish corruption, the specific charges of impropriety against Gillett were underwhelming: She auto-deleted text messages pertaining to an appeal in the natural gas case I mentioned above, and said during her confirmation hearing that she wasn't routing staff requests from other PURA members through her office when perhaps she was.

Not that those are great, mind you, but they are clearly not what the leaders of Connecticut’s utilities were actually concerned about. As Connecticut Gov. Ned Lamont, who appointed Gillett to two terms, put it, “I can guarantee you one thing, [the utility company] didn’t want her out of there because of emails. They wanted her out of there because she was holding them accountable.”

Indeed, if it wasn’t emails and text messages, it surely would have been something else the utilities and their allies in the legislature harped upon. And having succeeded in Connecticut, the leaders of monopoly utilities will surely run the same campaign against any regulator who doesn’t cave to relentless rate increases, essentially harassing them out of office.

There are several things both concerned residents and elected leaders can do to help change these dynamics. The first is simply to pay more attention to elections for utility regulators, where those positions are elected, or inject utility politics into gubernatorial elections where those positions are appointed. In 2026, 2028, and beyond, no one who wants to be a governor should be allowed to escape questions about their state’s utility regulators.

State legislators in most of the country can also direct utility regulators to implement a more appropriate formula for determining rates. Legislation to do just that was introduced in several states this year, including New York and Florida.

States can also prevent monopoly utilities from pushing the cost of their political activity onto ratepayers, eliminating items such as campaign donations, trade associations dues, and direct legislative lobbying from the amount utilities are allowed to recoup from customers. Several states have taken such a step in recent years — and California’s legislature just approved a bill, sending it to Gov. Gavin Newsom — and many more have legislation already on the table.

None of those fix the immediate problem of an excellent regulator having been shoved out of office for doing the very thing she is supposed to, but in the long term they would help turn the tide against out-of-control monopoly utilities and the pliant regulators who allow them to continually take advantage of the public.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Connecticut officials are considering having the state’s public pension fund invest in the WNBA’s Connecticut Sun, in order to prevent the team from potentially leaving the state.

• There’s a battle brewing over a possible casino on Coney Island.

• Nevada is the first state to settle with RealPage for allegedly helping landlords collude to fix rental prices. (I’ll have more on this later, but the settlement looks weak.)

• The Democratic nominee for governor in New Jersey, Rep. Mikie Sherrill, called for a reassessment of Sec. 230, part of the federal telecommunications act, which gives platforms such as Facebook and Twitter immunity from content liability.

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— Pat Garofalo