In Utilities, a Culture of Graft Costs Consumers Billions
The cozy relationship between utilities regulators and the firms they are meant to regulate greatly benefits a few bureaucrats turned executives. It’s been a disaster for consumers, who see nothing from it but bigger bills.
Deregulation has created a “revolving door” from employment in utilities regulation to private-sector firms. A widespread culture of fraud and corruption that costs consumers billions is the result. (Jens Büttner / Picture Alliance via Getty Images)
This week, utility regulators met at the annual “Let There Be Light” conference funded by major electric companies and data center energy hogs such as Amazon, Google, and Microsoft.
Activities included a secret workshop explicitly spelling out how regulators can get rich after leaving office. The private event, open only to utilities commission chairs, taught these public officials “How to Obtain GREAT Post Commission Employment,” according to an online agenda.
Another presentation led by Costco and Amazon laid out “what utilities and Commissions can do to help [large customers] meet their energy and business needs.”
The event represents a troubling trend in which public power commissions are practically sold to the highest bidder.
A 2024 analysis by climate watchdog Floodlight identified a “generational resurgence of fraud and corruption in the utility sector” costing electricity consumers at least $6.6 billion over the past five years.
Over that same time period, utilities’ shareholders have claimed losses of over $12 billion after alleging corruption or fraud, and electric companies have paid out half a billion in related settlements. Since 2019, seven power industry executives have been federally indicted or pleaded guilty to crimes
A standout example is the FirstEnergy nuclear bailout scandal. In 2020, Ohio’s House speaker and Public Utilities Commission chairman were indicted on federal racketeering charges after accepting $61 million in bribes from grid operator FirstEnergy in exchange for $1.3 billion in taxpayer-funded nuclear power subsidies.
The cause of all this graft? Deregulation. In 2005, Congress repealed the 1935 Public Utility Holding Company Act, which barred electric utilities from donating treasury funds to political campaigns. Since then, public utilities commissions, by approving rate hikes, have delivered roughly $4 million in additional annual profits to the industry.
Meanwhile, watchdogs describe a “revolving door” in which executives hop between utility commissions and the private-sector firms they regulate with few restrictions or oversight. One study of 473 public utility commissions found that 50 percent of commissioners went on to take a job within or adjacent to an industry they oversaw.
But there’s hope: Representative Josh Harder (D-CA) recently introduced a bill in Congress that would ban utility regulators from meeting in private with power companies, subjecting such negotiations to public scrutiny.
At the same time, Representative Kathy Castor (D-FL) has proposed legislation that would ban power companies from using ratepayer revenues for lobbying and campaign donations. Meanwhile, at least a dozen states are debating their own bills to curb power utilities’ political spending.