Commentary: Customers should not be forced to subsidize their utilities’ political influence spending

By Matt Kasper

The writer is the deputy director of the Energy and Policy Institute, a utility watchdog organization.

If we disagree with the contributions and political activities our bank or grocery store make, then we have the freedom to shop and do business with other companies. That’s not the case with our energy providers operating under state-granted monopolies, facing no competition for their services. In exchange for the monopolies, utilities have to submit to regulation by the Maryland Public Service Commission (PSC), which determines how much utilities are able to charge customers and how they can spend that money.

Under the PSC’s oversight, utilities are only supposed to charge customers the minimum amount of money necessary to safely keep their lights on and homes heated. But we know utilities regularly try to foist the costs of their political influence activities onto customers too.

Thankfully, Sen. Katie Fry Hester (D-Howard and Montgomery) and Del. Lorig Charkoudian (D-Montgomery) have introduced the Utility Transparency and Accountability Act (SB 682/HB 505). This legislation will protect customers and increase transparency by restricting how investor-owned monopoly utilities can spend customer money on expenses that do not impact the ability of these companies to carry energy to homes and businesses throughout the state.

The Utility Transparency and Accountability Act couldn’t come sooner. Recent utility industry scandals throughout the country that have led to investigations show us the various ways monopoly utilities improperly use their customers’ money as part of their political influence operations. One scandal in particular has impacted Maryland customers. FirstEnergy, the parent company of Potomac Edison that serves customers in Western Maryland, routed $60 million through a network of dark money organizations that was then passed to the former speaker of the Ohio House of Representatives who used some of the funds for personal benefit and to increase his political power. In return, FirstEnergy got a bill passed that included over a billion dollars ratepayer bailouts.

It wasn’t only Ohioans who paid for that corruption. In October, the PSC ordered a new audit of Potomac Edison after the FirstEnergy-owned utility admitted it owes nearly $1.7 million in refunds to Maryland customers it wrongly charged for bribes in Ohio, lobbying, corporate sponsorships, advertising, and other expenses that it made in relation to its central role in a bribery scandal.

In Illinois, Baltimore Gas & Electric’s parent company, Exelon, has had to deal with its subsidiary ComEd, similarly getting caught up in a bribery scandal and having to refund customers for its misconduct. Four ComEd officials are currently preparing their sentencing briefings after being convicted of working to bribe the former Illinois House speaker to get his support for legislation that would benefit the utility.

The new audit of Potomac Edison will seek to ensure that the wrongful charges to customers are fully accounted for and refunded. The scandals that involved FirstEnergy and Exelon’s ComEd may be the most egregious, but there are plenty of other utility expenses that, while perhaps not criminal, shouldn’t be charged to customers. Utilities attempt to charge customers for a host of political influence activities, from their political trade association membership payments to advertising costs to influence public opinion or boost the utility’s image. For example, in December, the PSC removed over $400,000 in promotional advertising and other expenses charged to ratepayers for Washington Gas’s membership in the trade association, the American Gas Association.

The Utility Transparency and Accountability Act can help prevent the scandals occurring in the utility industry elsewhere that don’t happen in Maryland. Stronger transparency provisions placed on the utilities will ensure that regulators, consumer advocates, commission staff, and all other interested parties, including customers, can see how money collected from utility bills is being spent. Finally, the bill adds another transparency requirement on electric utilities by requiring the companies to disclose their recorded votes in Regional Transmission Organizations.

Last year, Colorado, Connecticut, and Maine lawmakers passed similar legislation with the support of consumer, environmental, and watchdog organizations. In recent months, bills have been introduced in Arizona, California, Illinois, New York, Virginia, and Ohio.

Utilities have plenty of money to pay for their political activities without charging customers. Four of the largest parent companies for subsidiaries operating in Maryland (Exelon, FirstEnergy, AltaGas, NiSource) reported a combined $3.5 billion in profit last year. The Utility Transparency and Accountability Act will guarantee that when monopoly utility companies spend money on political influence activities and other activities completely unrelated to the delivery of energy services, that money comes from their profits, not their customer’s wallets.

House and Senate hearings on the bills are scheduled for Feb. 22. 

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