Scandal! Corruption! Electricity!
This is Bright Ideas, a weekly newsletter about clean energy taking on the world and winning. I’m Julian Spector—I live in L.A. and report on clean energy news for Greentech Media. I write this newsletter for fun. What do you do on Monday nights?
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The biggest political corruption scandal last week was all about electricity.
Federal prosecutors brought charges against Larry Householder, the Republican Speaker of the House in Ohio. They allege that Householder rose to power via a criminal conspiracy, in which he received $61 million to elect a small army of other state House candidates. This patronage won enough seats to vote Householder into the speakership. Shortly thereafter, he led the passage of a law considered by many to be the worst energy policy in the country last year.
The law transferred more than $1 billion from Ohioans to utility FirstEnergy, to prop up its recently bankrupt nuclear power plant division. The law also funneled hundreds of millions of dollars to uneconomic coal plants, and gutted the state’s renewable energy and energy efficiency programs, for good measure. The legal documents refer to the funder of the conspiracy as Company A, but the U.S. attorney noted at the press conference that
The fact that the utility apparently executed such a sweeping conspiracy to achieve its bailout, and thought it could get away with it, says a lot about the power utilities wield in American politics.
That came a week after Chicago utility Commonwealth Edison agreed to pay $200 million to settle its own bribery case with the feds. This isn’t a Red State or Blue State problem. It reflects a fundamental power imbalance that utilities enjoy across the U.S.
But since this newsletter is called Bright Ideas, I can’t just leave you with the observation that utility corruption transcends party lines and state borders. I’ll show how the rise of clean energy is making it harder for utilities to get away with the kinds of corruption and self-dealing that some have previously, or even very recently, enjoyed.
The invisible hand of monopoly
Americans profess great love for the idea of free markets making things better. But we quietly accept monopolies or near-monopolies in the provision of essential services, like electricity, telecommunications and waste disposal.
The lack of competition is supposed to be a better deal for customers. The theory is that duplicating certain infrastructure buildouts is wasteful. In the early days of electricity, so many competing power companies built their own wires to deliver electrons that they started to block out the sky over New York City.
So, we endowed utilities with monopoly power, but made them ask for permission to spend customers’ money. State regulatory commissions sprang up to ensure utilities were only spending money on necessary and prudent things.
That system can work out great if you have diligent, hard-nosed regulators, or a benevolent monopoly—much like monarchy can work with a benevolent monarch. But systemic power imbalances reveal the glaring flaw in this structure. Utility companies are often the biggest or one of the biggest companies and employers in a given state; they also have all the knowledge of how their infrastructure works and what investment really is necessary.
Since American democracy accepts unencumbered influence from dark money in politics, utilities regularly funnel millions of dollars into state political campaigns, sometimes even supporting the regulators who are supposed to regulate them.
If any of this sounds conspiratorial to you, I’ll just note that The Intercept reported on the influence peddling scheme in Ohio a year ago, based on disclosures in the utility bankruptcy filing. That FirstEnergy was throwing money around to get itself bailed out was no secret; the feds just added some searing details and figured out the scheme was twice as big as previously reported.
Money, it’s what utilities have a lot of, and sometimes they give it to politicians to get even more money from the public.
But here’s the good news
A while back, I brought my girlfriend Sam to a post-conference festivity in San Diego, a lovely city, and she accidentally besmirched the honor of a young utility professional. Sam brought up rooftop solar companies competing with electric utilities, and likened that rivalry to Lyft taking on Uber: we’re all better off with challengers preventing one company from becoming the only game in town.
The utility pro took this as fighting words, because rooftop solar companies did so little compared to a utility:
They didn’t guarantee electricity around the clock, they didn’t ship power across miles of challenging terrain, they didn't keep hospitals up and running through storms. Rooftop solar gives customers cheap power during the sunny hours, and that’s about it.
That may be true, but I think Sam was right on the deeper point, and it’s relevant here: Competition from clean energy is making it harder for utilities to get away with bribing state leaders to bilk the public of their hard-earned cash.
Monopolies get a pass when they are cheap and easy enough that customers don’t wish for other options. But now wind and solar, sometimes in combination with batteries, has largely become the cheaper option. Utilities that resist this truth forfeit their credibility as trusted experts on the electricity system.
The smart utilities hopped on board. As I covered previously, the rules around utility reimbursement mean that they can switch from coal to clean energy, charge customers less for power, and pocket more profits for shareholders at the same damn time. If you’re going to buy power from a monopoly, it might as well be a monopoly that’s buying 30 million solar panels and the biggest battery on earth (I see you, Florida Power & Light).
If a utility drags its feet, homes and businesses can actually abandon their utility and still meet their energy needs like never before. Some states make this easier than others. A law in Nevada allowed tech company Switch to buy its own power for data center operations; it’s using 100 percent clean electricity decades ahead of that state’s clean energy mandate, and saving millions of dollars compared to buying from the utility.
It’s harder to accept a bad option when there are better ones out there. And people don’t like monopolies telling them they can’t access the better option that people down the road, or the next state over, already enjoy.
Politicians feeling the seductive pull of corruption may wish to take note of this. I don’t know of anyone who’s gone to jail for saving people money on a cleaner form of energy.
The Energy Stream AKA stuff I’m doing in quarantine
I didn’t start paying attention to basketball until well after the Michael Jordan era ended. As such, the ESPN documentary series The Last Dance (now on Netflix, too) is making me feel more moved by 90s-era sports than I ever expected to feel.
Jordan had an unbelievable ability to will himself to surpass any other human on the basketball court, and watching the highlight reels of that is satisfying enough. But the narrative takes you back and forward in time to learn his origin story, and those of his teammates, as they navigate a climactic season that could be their last. And they have to navigate the media and celebrity and outsize public expectations too.
It shows that talent and determination can change the way the game is played in just a few years. Something similar is unfolding in the energy sector right now.