EMP S2E19: The American Antitrust Institute's Diana Moss explains her view that FERC is "deprioritizing" pro-competition policies in its electricity transmission and natural gas pipeline certification proceedings.

Diana Moss, an economist and president of the American Antitrust Institute, says the Federal Energy Regulatory Commission appears to be stepping back from the bipartisan pro-competition policies that have defined FERC's approach to regulation of the electricity and natural gas industries for the last 30 years. FERC's electricity transmission rulemaking would cement monopoly control of grid expansions needed for reliability and clean-energy purposes by allowing utilities to exercise a "right of first refusal," or ROFR, in building new transmission expansion projects. And the commission's stalled natural gas pipeline certification proceeding, which was pulled back and reissued as a proposal after landing FERC Chairman Rich Glick in hot water with Sen. Joe Manchin, D-W.Va., effectively permits "affiliate precedent" self-dealing to persist. 

"After 25 years of careful and largely successful efforts to weave competition principles into the oversight of energy markets, FERC’s commitment to promoting competition appears to be wavering," Moss concludes in a policy paper published on AAI's website.

Transcript

EMP S2E19, Diana Moss, American Antitrust Institute, transcript
(edited for clarity)

EMP: Welcome to the energy markets podcast. I'm your host, Bryan Lee, and our guest today is Diana Moss, an economist and president of the American Antitrust Institute. Diana, welcome.

DM: Good morning, Bryan. Thanks for having me on the show today.

EMP: Yeah, so why don't we start off by you telling us in just a short elevator pitch, what is the institute’s mission and where does its funding come from?

DM: Absolutely. The American Antitrust Institute is probably the longest-standing, oldest competition research education and advocacy organization. We advocate for vigorous enforcement of the antitrust laws to protect workers, consumers, small businesses and innovators. And we also advocate for what we call coherent competition policy, which will be, I think, very relevant to our conversation here. We work with the enforcement agencies, state and federal, private enforcers, with Congress, with business leaders and academics to craft advocacy positions that are pro-competition oriented.

EMP: Great. So you and I didn't overlap at FERC, but you were there for quite a while during a very interesting time in terms of the evolution of FERC’s pro-competition policy. And so you left the commission shortly before I started my stint there, but I was quite interested to see your economic and policy analysispublished on the institute's webpage in September, suggesting that FERC has “deprioritized,” as you said, its decades-long pro-competition policies. In particular, you cite two areas where FERC’s commitment to competition is flagging. One of which being its pending proposal to allow monopoly utilities to have a right of first refusal in building new transmission necessary for reliability and enabling the transition to clean-energy resources. We dedicated our previous episode to this issue, known by its acronym ROFR. The other issue involved FERC’s natural gas pipeline certification rules. You wrote, “After 25 years of careful and largely successful efforts to weave competition principles into the oversight of energy markets, FERC's commitment to promoting competition appears to be wavering. Troubling developments signal that the Commission may be moving away from, or abstaining from opining on, issues where competition principles are critical.” For example, you cite the rulemaking on electricity transmission, you say that “swerves away from competition,” and you mentioned the certification of natural gas pipelines proceeding that got FERC Chairman Rich Glick in hot water with Senator Manchin. Would you elaborate on those two?

DM: Sure. The commentary that AAI put out in September is really the culmination of observing what has been going on with FERC over the last several years, if not decade, and it's a bit concerning in that, as you mentioned, Bryan, FERC has focused a lot on competition in the last several decades. I had the good fortune and honor to be at FERC in the heyday of the Commission's pivot to consider competition issues more substantively, in their own decision making but also in policy in the energy - in the electricity and natural gas industries. I was there during the open access rules in natural gas and transmission - the regional transmission organization orders, the market-based rate debates. Just an amazing time to be at the commission. Development of the merger guidelines.

EMP: Can I interject there? So all of these groundbreaking FERC proceedings that you're referring to were all driven by economic principles, right? The strong economic principles that are really proven in real life.

DM: Absolutely. Absolutely. You know, this is a highly technological industry, and it's also a highly geographic industry in terms of moving molecules or electrons around and there were big economic developments. For example, the exhaustion of economies of scale in generation, the ability to build transmission. The development around natural gas pipeline markets, all of these, sort of, collectively pushed the commission in the direction of recognizing that there was more potential for harnessing the benefits of competition both on the natural gas side and on the electricity side. So the commission got on this pathway of really forging ahead into developing pro-competition policies through a rulemaking.

EMP: And that was on a bipartisan basis. Right?

DM: Absolutely. Back then the commission was very, very bipartisan. It was really a collective of consensus builders and folks who had their eye on the long on the long run. And so over time, you know, we've seen policy initiatives being built out on the natural gas and on the electricity side, but we're seeing these reversals, at least in these two cases. There are other potential examples where the commission seems to have held in abeyance promoting competition and reverted back to what are distinctly noncompetition policies. For example, the ROFR policy, but also not codifying the importance of not relying on affiliate precedent contracts for purposes of this of certificating new natural gas pipeline facilities. Both of these policies on the natural gas certification side and on the transmission ROFR side really work against the principles of competition and the benefits to ratepayers.

EMP: And you note in this paper that, you say, quote, “These developments create a tension if not outright conflict with the Biden administration's priority of competition as a top-line policy issue.” The executive order you referred to is concerned about consolidation in industries and competition that “has weakened in too many markets.” And so the executive order set forth a “whole-of-government” approach that is, quote, “necessary to address overconcentration, monopolization, and unfair competition in the American economy.”

DM: Correct. And FERC is mentioned in the in the executive order as a sector regulator that has a mandate to promote competition. And, yes, these recent developments at FERC are not aligned with the goals of the Biden executive order. And that is very much this whole-of-government approach to promote competition where sector regulators like FERC and the FCC and the Surface Transportation Board really work - and USDA - work in concert with the antitrust agencies, the DOJ and the FTC, to hammer out pro-competition policies and enforcement actions. And, you know, we're not seeing that high level of coordination and outcomes in in the FERC space as much as we are, say, over in the USDA space in food and agriculture and also in in other sectors. So they FERC seems to be lagging behind in stepping up to really meet the mandate of the Biden executive order.

EMP: Do you care to venture why that might be happening?

DM: You know, I think that's a good question, Bryan. I think it's a conglomeration of factors. First, you know, FERC - again, this is a highly technical industry driven by technology, driven by difficult tensions between state and federal regulation and antitrust exemptions, for example. It's also the culture of the agency. When I went to FERC in 1995, it was all regulatory lawyers and rate analysts and engineers - all very valuable skill sets. Very few economists were hanging around at the commission. I was, again, part of this movement to build up the capacity to bring on economists to look at markets and competition issues. So I think it's a mix of the culture. It's a very technologically driven industry. It's also an industry that traditionally has been dominated by regulated natural monopolies. You know, that's a big rift between a natural monopoly and more competitive, competitive markets. So, I think FERC struggles with that. I also think FERC struggles with the bigger mandate of the Biden administration, which is the clean-energy infrastructure program, which can be frankly, a little out of sync with the existing vertically integrated utility structure that we see in the U.S. and the goals of promoting efficiency and clean energy.

EMP: What's a natural monopoly? Are there really natural monopolies?

DM: Yes, absolutely. So natural monopoly, as an economist, any economist, will tell you is a firm that has, you know, sees vast economies of scale over a highly relevant range of their output. So declining long-run average costs. And when you see a firm with that kind of cost structure, it is actually more efficient for that single firm to serve the entire market. Right? Because they can and they can do it at a at a relatively low cost. The problem with that, of course, is if that firm is allowed to price at will, then we'll end up with supercompetitive monopoly prices. So the regulatory compact sets up a deal between the natural monopoly and the government to allow that firm to operate as a single entity, as a monopolist, but subject to rate regulation. And that's what we see at the state levels, subject to state-level regulation. You know, in the wholesale markets, which is really what we're talking about when it comes to FERC, again, it’s sort of the exhaustion of economies of scale, especially in generation, other developments have sort of chipped away at that natural monopoly model, opening up the wholesale markets for the potential for more competitive forces to operate.

EMP: You said early on that it results in more competitive pricing. Is that what you meant to say?

DM: So if you if you if you soften regulation or you, you restructure markets in a way where there isn't as a heavy handed regulatory control over how the firm prices in the utility industry, then, yes, prices will start to resemble more competitive outcomes than they would sort of regulated natural monopoly rates.

EMP: But if you have a natural monopoly that's got concentrated market power that's going to result in anticompetitive prices.

DM: Absolutely, if those if those prices are not regulated, which is, you know, which is again, the regulatory compact between the firm and government oversight.

EMP: Well, let's do a little historical perspective. Because it seems to me that, you know, antitrust issues have got some wind behind their sails on the Hill, it would appear. And a lot of what's driving those concerns appear to be similar to what we saw 120 or so years ago, when we first saw antitrust regulation emerge. And then I'd like to tie it back to how at the same time we saw monopoly regulation evolve for the utility industry. So do you want to tell us real quickly, you know, what the situation was like at the turn of the century, the last century, and how antitrust oversight and law evolved?

DM: Sure. So, the U.S. was the first country ever to have antitrust laws. And since the U.S. implemented antitrust laws, and especially over the last 20-30 years, hundreds of other countries have adopted some statutory protections for promoting competition. So, the U.S. was the innovator in antitrust laws. So, in the late 1800s, you know, there was a massive amount of consolidation, horizontal and vertical integration, leading to extremely large and powerful companies, often known as trusts. We saw them in steel and railroads and, you know, they were getting a piece of the action that happened all through their networks from all their input suppliers and their distributors, a tremendous amount of market power, a tremendous amount of harm, adverse impact, on consumers and small businesses. And so, you know, it was generally thought that this is not acceptable from a, from a societal good standpoint, but more important doesn't support the principles of a market-based economy and the democratic freedoms, the entrepreneurial freedoms, the consumer freedoms that sort of support a market-based economy. So, you know, here came the antitrust laws. It’s very simple, you know, three areas of the law there's the Sherman Act, section one covers anticompetitive agreements or conspiracies, section 2 covers monopolization or conduct that's designed to exclude or limit exclude rivals or limit competition and then the Clayton Act Section 7 looks at potentially illegal mergers. So things trundled along in the early 1900s where there was admittedly more competition than there is now. And what we've seen, especially in the last 40 years, is a tremendous amount of consolidation in the U.S. economy. A tremendous amount. Look at wireless technology, look at health care, hospital systems, look at internet, broadband distribution, I mean, the list airlines, the list goes on and on. And so a tremendous amount of consolidation has led to markets that are really dominated, in some cases, by just a few firms, oligopolies. Or even a dominant firm. Look at digital technology where you have, you know, the 800-pound gorilla is sitting in social media and search and e-commerce. And we can talk about why that happened, why unenforcement of the antitrust laws led to this significant consolidation. But here we are dealing with the fallout and the damage from four decades of massive consolidation and that absolutely did not miss the utility industry, right? In fact, it was a double whammy, Bryan, because as the antitrust laws were not enforced vigorously over the last 40 years, and we had restructuring in the electricity and the natural gas industries, which in itself led to massive consolidation. You know, we went from 150 utilities to less than 50. There was this sort of perfect storm of forces, which really delivered a pretty significant mandate to the industry and to FERC in particular to really pay attention to what was going on with competition.

EMP: So, I know a lot of the consolidation over the past 20 years or so reflected an attitude back then that, you know, the electric utility industry in the United States was the most disaggregated (electric) industry in the world. But that goes back again to this, the last century, we saw antitrust laws evolve. And with the concern with trusts was evident in the electric industry as well. And you saw in the Public Utility Holding Company Act, which was passed in conjunction with the Federal Power Act in the mid ‘30s, you saw a breakup of these large trusts. And so what you're saying then is that over the last 20 years or so, we've allowed them to reaggregate and regain market power.

DM: Absolutely. I mean, look at AT&T, right? AT&T was broken up in 1984, broken into the four - the seven baby bells. AT&T has since then pursued a strategy of sort of reacquiring, through horizontal and vertical integration, significant power that it held in the 1980s. And so, again, utilities no exception. Now I'm not saying that in the heyday of the merger wave in the electric utility industry following restructuring in wholesale markets, that not all this consolidation was actually beneficial. So some consolidation absolutely could reduce costs for consumers, could realize economies of scale and scope and coordination and that sort of thing. But, you know, the consolidation movement in the industry really got a head of steam and barreled forward with FERC largely without the capacity on the staff to evaluate these electricity mergers. That's when, when I was there, and there was a lot of hiring of economists and lawyers who knew something about antitrust. But also there, during that period, there was more coordination between FERC and the U.S. Department of Justice Antitrust Division and the Federal Trade Commission to look at these competition issues.

EMP: So you talked about vertical integration behind these trusts. We are currently wrestling with this vertical integration in the utility industry. Vertical integration in the steel industry would be that Andrew Carnegie owned the coal mines, the factories that turned the coal to coke that he owned the iron mines and, and probably had interest in the railroads that brought all of that material to his steel mills in Pittsburgh. In the same token, we've got - still have vertically integrated monopoly-regulated utilities at the state level where you have utilities that own the power plants that produce the power, the transmission lines that bring the power to the distribution system, they own the distribution system, and the only part of that triumvirate that's really got a chink in its armor has been on the on the energy side. But still, you see a lot of utilities, particularly in the Southeast, using that vertical integration and their control over the wires to impact market entry and competition on the energy side. Do you want to comment on that?

DM: Yeah, so you've really put your finger on kind of the beating heart of the competition problem in the electric utility industry, which is the vertical integration. So most utilities as you mentioned, they own generation units. They own transmission which extends across state lines and really is the backbone of the of the wholesale markets, and they own distribution, local distribution there. They also, increasingly, utilities are owning data assets, and they are building out the capability to compete with third-party providers for rooftop solar and other sources of microgeneration. So they're very much into that consumer-facing side of the business as well. When you have a vertically integrated utility or any vertically integrated firm, you know, the major competition concern is that if that firm has significant market power, it has not only the ability, but also the incentive to use, in the case of utilities use the transmission system or even the distribution system at the local level to lock out rivals. And you know, this is the age-old problem. And there are lots of ways for utilities to use their transmission to make it more difficult for utilities to compete. This was the subject of the original Otter Tail case in 1973. This basic problem was the subject of the Open Access rule and then the follow-on rules for developing RTOs. This basic incentive problem to use transmission to ice out rivals exists today. And frankly, back when FERC developed the Open Access rule, there was a big debate at that time in the commission and outside the commission about whether the commission could have actually unbundled the industry and required the spinoff of generation from transmission to sort of disconnect the very powerful incentives to use transmission to foreclose competition. They didn't. FERC didn't do that. They chose a very different policy path, which is now a very complex and controversial form of conduct regulation, where RTOs now control transmission systems in certain parts of the country, as governance organizations, but in other parts of the country we still have bilateral markets that are dominated by these very large, powerful electric utilities. And again, Bryan, back to the consolidation in the industry, all the merger activity in some cases has created even larger entities with larger wingspans of transmission and generation, which kind of supercharges these incentives to exercise market power.

EMP: Yeah, so getting back to natural monopolies. It seems to me there's an evolving thought on that as it comes to the electric industry. Clearly we have fairly general agreement that the energy portion of this triumvirate I mentioned is not a natural monopoly. But it seems to me we're moving - largely technology driven - we're moving towards questioning whether the transmission side and the distribution side are truly natural monopolies. Now in the transmission rulemaking that you cite in your policy paper on the website, we have an issue involved in whether or not the transmission portion is a natural monopoly while there are companies that really want to compete with the utilities on that side. And by the same token on the distribution side, we have what you called these microgeneration technologies, rooftop solar, storage, etc., that really provides an opportunity for competition on that (distribution) side of the three-legged stool. So do you do you feel like there is still a natural monopoly element to electric utilities?

DM: Well, I think there is absolutely to some extent in generation and transmission. The benefit of the Open Access rule, of course, was to promote competition in the wholesale markets, and it really spurred the entry of, you know, the first generation of what we call merchant generators who entered the market as generation-only providers to build - site and build projects. We now have transmission merchants who come into markets and bid on projects and who are now facing some very difficult, very difficult set of circumstances and coming up against vertically integrated utilities. The ROFR works directly against the role of independent merchant transmission companies to promote competition. So we're in this a bit of a murky gray area, right? From a technological, economic, engineering standpoint, I think that problem’s not going away. And we're seeing evidence of the continuing power of control over transmission control over distribution in a lot of cases. We're seeing it in the in the ROFR debate. We saw it, for example, in a case against Salt River Project by SolarCity, where the allegation there was an attempt to foreclose a third-party provider, SolarCity, from markets in Arizona for rooftop solar. So this is all alive and well and let's not forget that getting access to data is an essential part of competition, especially at the more local distribution levels. And that's a big fight, too, that's being aired in local in state regulatory commissions. So it is what it is. I don't think we'll ever get to the point where this industry will not have natural monopoly characteristics. And so a lot of competition is working around the edges, but at each, you know, at each major turn in the road, wow, there's a big hurdle to entering the market, getting access to information, getting access to the ability to site and build projects. And you can layer on top of that, of course, all the state and federal divides and conflicts that we see there.

EMP: Yeah, it's interesting that you mentioned the data component of that. I don't really focus on that very often here in the podcast. But, you know, we had Nora Brownell, the former FERC commissioner on, complaining about the smart meters that we spent tons of money on back after the ‘07 economic turmoil. But you know, really beyond allowing utilities to drive by in a car to remotely access usage data, we're not really tapping into that - the informational transformation that these smart meters hold the promise for.

DM: Right. And it's a question of who owns the data and who can get access to the data in terms of third-party market participants so that they can get their products to consumers. I also want to mention, Bryan, another really important historical factoid, and that is, you know, we went through a phase in the industry where there was this retail choice concept. Well, let's give consumers sitting in their homes and their businesses the ability to choose their supplier. And that was sort of a follow on to restructuring at the wholesale level. It sort of dove into retail markets. And you know, that was that was not a success. It was very clear in the retail choice movement, that consumers didn't want to be bothered with having to figure out who they were going to buy their electricity from. And it was not a successful project. So I think that dovetails with what we were talking about just a minute ago, that we have a consumer segment, an end-use consumer ratepayer segment, that may not be so interested in competition. They're interested in energy efficiency and the goals of clean energy, but they're not so interested in competition. That's still very much a wholesale issue.

EMP: Yeah, I might quibble with you on that. I think, you know, I spent many years as the media consultant for the Retail Energy Supply Association. So I had a very front row seat in terms of why that hasn't happened. In Texas, which is the only state that got it right in terms of retail competition, you've got the utilities quarantined from the retail market. They're in charge of the wires. They don't get involved in the sales to retail consumers. When someone goes to initiate electricity service, they right up front choose an electricity - competitive electricity provider. In the other dozen or so states that ostensibly have retail competition, it's a very different paradigm. The incumbent utility is still the primary supplier of electricity. And they have various processes from state-to-state where the utility goes into the wholesale market, and procures that energy at cost for all of its customers that are not on a retail choice (contract). And so if you're the 800-pound gorilla in the market, bringing utility (service) at a de facto wholesale bundled rate to the consumer, how is this small startup going to compete with that?

DM: Yeah, well, I, I agree that that's an issue. And I will give you Texas. Okay, I'll modify my earlier statement on retail choice. Texas it really is a very different model and a very different example.

EMP: Yeah. And I think if we adopted that everywhere, a lot of these problems that we're talking about go away. But anyway, let's step back a little bit, take a little bit of a more macro view here. So, you know, we talked about how the Hill has concern about these tech companies and their market concentration and possible anticompetitive behavior. Do you want to quickly elucidate on thatDM: Sure. So, you know, the digital tech sector is concerning from a competition standpoint. there has been virtually no enforcement of at least the merger law, Section 7 of the Clayton Act, in the tech industry. AAI follows these data very carefully. We've advocated on it. We have we have testified in front of Congress about the lack of merger enforcement in the tech industry. We also have, much like utilities, we have an industry that's got very unique economic characteristics, right? So we have something in the platforms, for example, we have something called network effects where very powerful force behind the attractiveness of a social media network if more users join the network. We have lots of what we call data externalities and the collection and the process and harnessing of user data, lots of economies of scale and cloud technologies. So another, another industry, much like utilities that have very unique economic and technological and engineering characteristics. So a weak record a merger enforcement, what's the result? Well, we have some really big powerful tech companies. In fact, the Big Five tech companies have probably acquired close to a thousand companies in the last 25 years. And not all of those, of course, are reportable to the antitrust agencies under the Hart Scott Rodino filing requirements. But only one of those transactions, as of about two years ago, was challenged. So what they are, what the digital business ecosystem model is, is really a growth-by-acquisition model. So that's how they grow, instead of growing organically, right, through improving product and service and innovation.

EMP: So in other words, they're buying out their competitors and getting big. They're not innovating. They're buying the innovators and wrapping that into their big honkin’ market power.

DM: That is absolutely a concern. So Facebook's acquisition of Instagram and WhatsApp might be good examples of acquiring innovative, you know, nascent rivals. Google acquired Looker, which is a big, probably the leading cloud technology startup. They did that specifically to reinforce their market power in the cloud market. So the bottom line is we have some very powerful dominant players in in these digital tech markets. And so, you know, there was a movement that started about five years ago, actually from the very far left of the ideological competition spectrum, to really focus on the market power of the techs. We, at AAI, we have done that as well. We’re more of a center, left-of-center-oriented organization. But we've also flagged the growing market power of firms in more traditional sectors like health care, energy, telecoms, airlines, that sort of thing. And so I think where we're at now is a recognition that the antitrust laws, especially Section 2 of the Sherman Act, which is the monopolization statute, those cases are hard to bring. We don't see very many Section 2 cases. They're very hard to bring the standards of proof are very high. And so bills like Senator Klobuchar’s American Online Innovation Act, Senate Bill 2992, is really designed to be a workaround to Section 2 of the Sherman Act, to provide new tools, new standards, new ways of getting at monopolistic conduct that is harmful to consumers. And so that has taken up a tremendous amount of time, both on the House side with the big report they did a couple of years ago on digital tech, also on the Senate side. We see it in Senator Blumenthal’s bill on the open app market, which goes after this 30% commission that Google and Apple take on sales through the app stores. So big focus there. Big, big focus and very unusual, Bryan, because we now see legislation that is targeted, not only at the digital tech sector, but at specific players in the digital tech sector.

EMP: And you mentioned two Democratic bills, but the concerns that those bills are trying to attack are shared on both sides of the aisle to some extent?

DM: I would actually disagree with that.

EMP: Okay, good.

DM: Yeah, so, you know, Senator Klobuchar has made very good progress in moving her bills along over the last year so. I think it's safe to say that the GOP interest in those bills does not center on competition and the restraint of market power exercised by the large digital techs. It really centers on the free speech issues on a lot of these information platforms, news content media - on the free speech issues that were raised during the 2020 election. And that is a sole focus for the GOP. Whereas on the Democratic side, I think it's safe to say that the focus is much broader about reining in the market power of these large digital techs and protecting consumers and promoting innovation.

EMP: Well, thanks for that clarification. So we've talked about the legislative side. Let's talk a little bit more about the regulatory side. There are two primary federal agencies in the antitrust field, the Federal Trade Commission and the Department of Justice. And getting back to the ROFR issue that we talked about, those two agencies were very prominent in the comments, I understand, in terms of urging FERC not to prolong the anticompetitive effects of ROFR. So that's by way of saying, you know, we have a new chair at the Federal Trade Commission, and apparently her philosophy towards antitrust enforcement is welcomed by a number of public interest groups who have weighed in with a petition before the FTC for an investigation into utility practices, particularly in terms of dark money groups, bribery, all these horror stories that we've seen in recent months and years. Can we talk about Lina Khan's philosophy as FTC chair? Are we going to see a more active enforcement of antitrust law under her tenure?

DM: Yeah, so I think the Biden enforcers - Jonathan Kanter, the Assistant Attorney General over at DOJ for the antitrust division and Lina Khan as chair of the FTC - were installed in those positions of leadership - we'll call them the antitrust chiefs - specifically to implement a more aggressive enforcement agenda. And that, you know, that covers all three areas of the law: agreements, monopolization concerns and mergers. If you dig down into the Gestalt behind those appointments and how Kanter and Lina Kahn got into the leadership positions, you know, there's was a movement afoot continues to be a movement afoot, you can call it the Neo-Brandeisian movement, that really takes the view is that antitrust has much broader goals and purposes and designs than the way the laws are currently written, right? Right now the laws are written to, to protect competition. So, enforcement addresses head on mergers and conduct that is designed to restrain, or limit, or eliminate competition. And the effects of that, obviously, are felt by consumers, workers, innovators. The current leadership has a bit of a broader view of how antitrust should - what - the problems antitrust should fix, including things like not only consumer harms - higher prices, lower quality, less innovation - but also, say, inequality issues. A lot of issues we see in the labor market. ESG goals, for example, the effect of mergers on environmental sustainability. That's a much broader mandate for antitrust than what exists right now in the statute and in the case law. And so in implementing, especially over at the FTC, which is I think, different than what's going on with DOJ right now, we are seeing some test balloons go up to approach more vigorous enforcement along these lines. The agencies have also asked for comments on the merger guidelines, and specifically asked about how broad those guidelines should go. So we have seen the FTC bring a variety of cases. We've also seen the DOJ bring a variety of cases. By the way, DOJ has six cases in litigation right now. And the loss record on those six cases right now is at 50%. And we care about that because antitrust is played out in the courts. And you know, that's where the case law comes from. And we are waiting to see how some cases over at the FTC evolve. But I think Chair Khan has signaled an openness to talking to industry participants about ideas on how to promote competition. And, you know, you mentioned the petition that came in, which really is a very, a very wide-ranging, sweeping set of issues around the utility industry. I think, if you carve out sort of all the political dark money lobbying concerns, and you focus - bead in on the set of issues that directly affect or deal with competition in the utility industry - and consumer protections, since the FTC also has that mandate - you would be dealing with a much smaller group of issues. And the goal there of course, is for the FTC to launch what's called a 6(b) study to study the industry. And of course, Chair Khan has also signaled her interest in using the FTC’s rulemaking authority to address competition problems. So the FTC has more policy tools at its disposal.

EMP: Yeah, I read an opinion piece the other day that I took issue with. It referred to the utility industry, and airlines, and railroads as ex-monopolies. And that's far from the case right? But you know, it was interesting to me when I was a reporter how, as much as the utilities were vociferously protecting their monopoly powers, they were by the same token going to the Surface Transportation Board and complaining about monopoly power within the railroad industry. So I guess there was a hypocrisy-free zone there.

DM: Well, of course they’re complaining about the railroads because they, you know, they buy important inputs like coal and, you know, rail, supplies of oil, and they don't want to pay monopoly prices based on a lack of competition in the rail industry. By the way, that's another poster child for consolidation and the role of a sector regulator that has not aggressively promoted competition in the sector. So just a follow-on comment: When I was at FERC in the early 1990s, that was, I mentioned earlier, that was the era where there was more coordination across FERC and the antitrust agencies. That was a very important development because all of these agencies need to coordinate and collaborate - subject obviously to guidelines and procedures - to think and talk about competition issues in the industry. The comments that the FTC and the DOJ submitted in response to the FERC’s ROFR proposal are a very good example of how concerned the agencies are about regulatory initiatives that really challenge the core goals and values of competition. That was a direct hit on the FERC’s ROFR proposal. So let's not underplay how important those comments were. Same thing for AAI’s commentary on that. And we have seen historically, you know, lots of friction between how regulation approaches competition issues at FERC versus how the antitrust agencies approach those issues. And frankly, I think those points of tension - not only in how they evaluate cases, what cases they decide to review or challenge, but the remedies that they take, for example, in utility merger cases - that can lead to very, very different outcomes.

EMP: Well, I've exhausted my notes, Diana. I don't know if there's anything else you want to bring up for the good of the order.

DM: No, Bryan, we have covered a lot of issues here and I think it really demonstrates how multifaceted competition issues are in this industry and how important it is to see more coordination and a more of a holistic view of how to promote it in the industry. 

EMP: Diana Moss, the American Antitrust Institute. Thank you very much. 

DM: Thank you, Bryan.

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