As Householder trial begins, EPI releases guide for policymakers to protect ratepayers from utility scandals

State and federal policymakers can adopt a series of policy changes that would ban utilities from charging customers for their political operations and make it harder for them to conduct corrupt schemes, according to a new report released by the Energy and Policy Institute. 

The report comes as Larry Householder, the former Speaker of the House of Ohio Representatives, stands trial for a series of charges related to his alleged acceptance of $60 million in bribes to his political organization, with the money originating from FirstEnergy before winding its way through a series of dark-money organizations. In return, FirstEnergy secured a $1 billion ratepayer-funded bailout for several of its unprofitable nuclear and coal plants, and another lucrative provision that guaranteed the profits of FirstEnergy’s Ohio utilities at ratepayers’ expense.

The FirstEnergy case is not the only example. Customers in several states, including Florida and Illinois, have increasingly learned that their utilities have provided the money behind schemes to influence politicians and elections. Eric Silagy, the CEO of Florida Power & Light, abruptly announced his retirement yesterday amid scrutiny over his personal role in that utility’s alleged spending on elections through dark-money schemes.

Some of the cases have led to high-profile criminal charges and indictments, but utilities have also exploited a host of more mundane legal loopholes to use customers’ money to try to influence politicians and regulators to grow their profits. 

Rules, Disclosure, Enforcement are key to reining in utility abuses

The EPI report, “Getting Politics out of Utility Bills,” outlines the major ways that utilities currently spend money to influence political outcomes, including election spending, lobbying, trade associations, spending on charitable groups and dark-money organizations, public relations and advertising, and astroturfing. 

The report then offers a series of solutions that Congress, the Federal Energy Regulatory Commission (FERC), state legislatures, and state public utility commissions can adopt to protect customers from paying for their utilities’ political activity.

EPI’s report offers specific remedies that policymakers can adopt in three broad categories: 

First, policymakers can modernize rules to prevent utilities from using ratepayer money for any political activity. 

Second, policymakers should adopt mandatory disclosure mechanisms to ensure that the public and regulators have better tools to catch utilities that continue to break those rules. 

Finally, policymakers should set up explicit enforcement regimes to deter utilities from breaking the rules.

FERC considering action on trade association, charitable, political costs

Some policymakers are considering several of the solutions raised by EPI. FERC issued a Notice of Inquiry in December 2021 seeking comment on how utilities recover costs in FERC-jurisdictional rates of industry association dues, charitable contributions, and other political expenses, including advertising. 

FERC received a host of comments from state regulators and agencies, consumer advocates, and environmental advocates suggesting a series of reforms, some of which mirror the proposals EPI is making in its new report. Utilities and their trade associations defended the status quo. 

FERC has not announced any further action since receiving comments and replies in the docket. 

Download the entire report (.pdf) here.