Historically, there are lots of good reasons why utility companies should have a monopoly in their service areas. Imagine if instead of one set of poles and wires along our streets there were 3, or 5, or a dozen electricity providers, each with its own network. It would be chaos! And yet, it’s no secret that monopolies are antithetical to the idea of free markets. A lack of competition distorts the capitalist model in ways that often lead to higher prices for consumers.
In theory, utility companies in America are regulated by public boards and commissions whose job it is to make sure the best interests of customers are honored. Yet despite a raft of good intentions, those boards and commissions often get populated not by people looking out for the public good but by partisans who are friendly to the utility companies and who go out of their way to put the desires of the companies first and the needs of the public last.
Floodlight is a nonprofit newsroom that investigates the powerful interests stalling climate action. Among its journalistic partners are NPR, The Intercept, HuffPost, The Guardian, Grist, the Los Angeles Times, The Texas Tribune, and others. This week, Floodlight reporter Mario Ariza published a report that claims 25 investor-owned US utility companies have funneled at least $215 million to dark money groups in an effort to elect sympathetic state legislators. The payoff for the companies has been higher electricity prices and the hindrance of plans to add renewable energy in their area.
There is a saying that government in America is for sale to the highest bidder and some of those utility companies have done everything in their power to prove the truth of that statement. In a few instances, the utility companies have been guilty of outrageous things.
Ariza writes that Floodlight and The Guardian used public records and self-disclosure data from the Center for Political Accountability, a non-profit that tracks corporate dark-money, to piece together how much for-profit power companies might be spending. He says dark money is difficult to trace and the $215 million reported will undoubtedly be an undercount.
The Edison Electric Institute defended the spending. “Electric companies are subject to the same strict laws and regulations that apply to all businesses,” Brian Reil, a spokesperson for EEI told The Guardian. State regulators add even more scrutiny, he said. Critics argue the dark money spending is kept private in part to make sure the disruptive transition to green energy happens on the companies’ terms or not at all and to hinder public oversight.
Utility Companies Have Low Friends In High Places
Perhaps the most egregious recent example occurred in Ohio recently. In 2016, two nuclear reactors operated by the FirstEnergy Corporation were hemorrhaging money. It turned to Larry Householder, a Republican representative in the state legislature who wanted to be Speaker of the House.
Ariza reports that Householder and FirstEnergy made a deal. In exchange for financial support from the company, Householder would engineer a bailout for those nuclear power plants. The conspirators created dark money groups, among them Generation Now and Partners for Progress — they always have such splendid names — and started flooding them with cash.
But the FBI was listening. David Devillers, a former US attorney for the southern district of Ohio, said in an interview that dark money groups were “the perfect money laundering animal.” With tens of millions from FirstEnergy, Householder won the speakership in January 2019. He later passed a bill that provided $1.3 billion in taxpayer-funded bailouts for FirstEnergy’s nuclear plants.
The bill caused a backlash which led to a ballot initiative to repeal it. But Householder used $38 million in dark money to fight it. Racist and misleading television ads warning of a “Chinese takeover of Ohio’s electric grid” saturated the airwaves, telling Ohioans not to sign the ballot petition against the bailout. In total, FirstEnergy contributed about $60 million in dark money to Householder. FirstEnergy pleaded guilty to conspiracy to commit wire fraud and was forced to pay a $230 million fine. Householder was found guilty this March and could face up to 20 years in prison when sentenced later this month.
Such shenanigans are seemingly commonplace in Florida. Philip Stoddard, the former mayor of South Miami, says Florida Power & Light (FPL) poured tens of millions of dollars into an effort to defeat him in 2018 and again in 2020, using a bevy of dark money groups to create mailers, robocalls, and attack ads to oppose his campaign.
Stoddard attracted the ire of FPL because he dared to criticize its handling of a nearby nuclear power plant and advocate for more rooftop solar in his city. Anyone who has visited Florida recently is amazed to see that there are virtually no rooftop solar systems anywhere in Florida, largely because of opposition from the state’s utility companies. “I want to shut down this scam,” Stoddard said in an interview. “This is being used to corrupt the political system.”
Dark Money & The IRS
Ariza reports that while the Internal Revenue Service (IRS) is responsible for overseeing non-profit groups, experts uniformly describe dark money as the “wild west.” Between 2015 and 2019, the IRS didn’t revoke any tax-exempt group’s status for violating political spending rules. And the numbers of IRS agents whose job it is to police the groups has dwindled from nearly 1,000 to fewer than 600, according to congressional testimony. Well informed CleanTechnica readers will recall that just a few weeks ago, one of the demands of House Republicans was cutting funding for the IRS. The corruption in America extends to the highest levels.
“There’s very little revenue for the IRS in regulating charities and there’s enormous political risk that seems to have been damaging to the IRS’s capacity to do other things,” Brian Galle, a law professor at Georgetown University who focuses on taxation and non-profits told Ariza. That is primarily a result of the current tax code, which is written to protect the privacy of individuals filing their taxes.
“When we wrote [the code] it didn’t really occur to us that this was going to create problems for the political system,” Galle said. “It comes from an era where we emphasized individual privacy because we didn’t understand the stakes for politics.”
The people who wrote the IRS code maybe didn’t fully appreciate the opportunities it would create, but the lobbyists and lawyers who make their living bending and twisting the legal system to the advantage of their clients certainly did. They have weaponized the IRS code to create a nearly impenetrable shield for their clients to hide their nefarious doings from the eyes of the public.
“Democracy dies in darkness,” is the motto of the Washington Post. The machinations of America’s investor owned utilities prove how true that is. While utility companies are shrieking about how renewable energy will make everyone’s utility bills higher, it is actually the backroom deals and political cronyism — paid for by utility customers — that is keeping the cost of electricity in America higher than it should be. When a monopoly metastasizes, it is the people who get hurt.
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