EMP S2E15: Climate activists David Pomerantz and Jean Su explain the impetus behind a petition asking the FTC to investigate anticompetitive practices by utilities to protect their monopoly status and stymy market entry by competitors.

David Pomerantz of the Energy and Policy Institute and Jean Su of the Center for Biological Diversity explain the impetus behind a recent petition in which hundreds of public interest groups and other entities asked the Federal Trade Commission to investigate the monopoly electric utility industry and its efforts to preserve and enhance their monopoly status and stymy market entry by competitors and clean energy resources.

Transcript

EMP, S2E15, David Pomerantz, Jean Su, transcript
(edited for clarity)

EMP: Welcome to the Energy Markets Podcast. Our guests today are David Pomerantz and Jean Su. David Pomerantz is Executive Director of the Energy and Policy Institute, a watchdog group that works to expose utility misinformation aimed at prolonging fossil fuel use and stymieing market entry by clean-energy resources. Before joining the Energy and Policy Institute David was with Greenpeace, and before beginning his activist career spent a while as a news reporter in New York, which as a former reporter I appreciate. Jean Su is the energy justice director and senior attorney for the Center for Biological Diversity, a group dedicated to securing a future for all species hovering on the brink of extinction, with a focus on protecting lands, waters and climate that species -- including humans -- need to survive. Before that Jean was an associate with Milbank, Tweed, Hadley and McCloy in Los Angeles and Singapore. And prior to that was with McKinsey & Co. and the Clinton Foundation. David and Jean, thank you so much for coming on the podcast.

JS: Thanks for having us.                                                                                                                     

DP: Thank you, Bryan.

EMP: Yeah, so I reached out to you because your groups were among some 230-plus organizations that recently asked the Federal Trade Commission to investigate the electric utility industry in this country. The 44-page FTC filing states that, quote, “the rise of renewable energy competition and changing regulatory landscapes challenge the electric utilities’ century-old technology and business model. The electric industry is engaging in unfair competitive, unfair business and consumer-harming practices that warrant the Commission's investigation.” I’ll go on to quote that “abusive utility practices are leading to increased electricity rates, obstruction of clean energy competitors and utility interference in the democratic process,” which is a huge issue today. So the filing goes on to say “the urgency for a federal investigation of utility companies’ unfair and antidemocratic processes -- practices, excuse me -- at this time cannot be overstated.” So you asked the FTC to address basically two classes of utility abuses, unfair competitive actions that harm clean energy competitors, including consumers who want to generate their own renewable energy, such as rooftop solar. And the second class of abuse was unfair and deceptive acts, including corrupt dealings and voting interference that enrich utilities and ultimately drive up consumer electricity rates and decrease consumer choice. How did this filing come about?

DP: Well, thanks for having us, Bryan. Jean and I and a few other groups -- and I should mention them off the bat just because they've put a lot of work into this, so it's important. I want to make sure they get credit too. Institute for Local Self-Reliance, Solar United Neighbors, and Open Markets Institute have all been key stakeholders in putting this petition together. Jean, am I missing anybody out of that group? Okay. We have all been working in different types of clean energy advocacy over the last few years and all of us have been, in one way or another, bumping our heads up against the sort of behemoth monopoly utility machine. And you know, all our groups have different approaches to that. I'll just speak for EPI real briefly and say that, you know, we see our role as kind of exposing and throwing some sunlight onto the activities of utilities to slow down the transition to clean energy. And then, you know, specifically unearthing the details of their political machines, which are so often geared toward corrupting basic democratic institutions. And we all kind of agreed that we were seeing more and more of that and that the primary regulators of utilities -- so I'm sure we'll talk more about this -- but the public utility commissions in the states and FERC at the federal level, which is responsible for regulating the bulk power system, were not taking action to get specifically at these types of issues, the anticompetitive issues, the corrupt dealings, the deceptive practices, and all of this sort of behavior that in sum is incredibly anti-consumer. And so, we were putting our heads together and thinking about different regulators, different entities that could bring some kind of accountability, and FTC is -- unlike those other regulators, FTC is primarily concerned with ensuring fair competition. That is kind of its brief, and we thought that they might be interested in sort of exploring the totality of the problems in the sector and investigating them. So, you know, thanks to the hard work of Jean and many others put together this petition and Jean what would you add to how this all came about?

JS: Yeah, so I think one of the Center’s roles in all of this is, as Dave was talking about his role, is that we are primarily lawyers and policy advocates and campaigners. And one of the things we tend to look at are interesting ways to approach these problems with laws that haven't necessarily been used towards them. And one of the most important things about this petition is that it calls onto antitrust laws and applies it to utilities, which for a very long time have been immune from scrutiny under these laws,. And we can talk about that for a number of reasons. But one of the most important principles of antitrust law is that it was founded on the idea of protecting democracy from corporations and undue influence of wealthy corporations as well as people's -- honor democracy, that it is actually a fundamental bedrock law in terms of protecting our democracy. And one of the things we've seen from utilities in the last few decades is their assault on our democracy, how they are, you know, not only interfering in elections, but essentially using their monopoly status to harm consumers and to silence choice and renewable energy choice. This is a way of looking at antitrust law through this lens called a Brandeisian lens, essentially. Professor Brandeis and Justice Brandeis who wanted to use antitrust for those purposes. So with the new chair, Lina Khan, coming into the FTC who is a Brandeisian kind of -- who follows that Brandeisian philosophy herself, we thought that it was long due, overdue, for the FTC to actually embrace those democratic principles and look at utilities through this lens as obstructers of democratic principles and a lot of ways and hold them to account using antitrust laws.

EMP: Great. Well, you know, let's, let's talk a bit about specific examples of these abuses that you cite. I mean, on the podcast, we've talked somewhat tangentially, about the bribery scandals in Ohio and Illinois. I've been reading with great interest the exposés coming out of Florida, which I think both or all three of these instances are behind your filing, Why don’t you go into detail about what it is that's frustrating clean market entry, clean energy market entry?

DP: Yeah, happy to do that. So I'll just say, at a high level and then very happy to kind of run through Ohio and Illinois, Florida, really any. And there are many more cases, particularly if you stretch back a few years, you know, dark money spending in Arizona from a few election cycles ago, so it's really a nationwide problem. But just to set the stage for that. I want to pick up on your prompt there, Bryan, around clean energy market entry. Basically, a lot of this corruption is geared around protecting and fortifying the walls that utilities have around their monopoly kingdoms. And so, whenever they perceive a threat to that, from competitors, they will try to reify their monopoly through corrupt means if they need to. If they don't have popular support for that agenda then they'll sort of undermine the democratic institutions that are meant to represent popular support. And so, you know, that could be competition from third-party generators and independent power producers. It could be competition from rooftop solar, you know, and to some degree, it doesn't matter. The overall theme is protecting the monopoly. And so I guess we can start with Ohio, where the utility FirstEnergy was feeling the pressure of the competitive market on its nuclear and coal plants. And it wanted to bail those out. It had struggled to do that through a number of ways. That's a piece of the history that a lot of people sometimes gets washed out, but FirstEnergy had tried to get bailouts for its struggling plants through the Trump administration and failed. They had tried in previous iterations of the Ohio state government like through the Kasich administration and failed and they finally found a way to do it. And it was essentially to buy an entire chamber of the Ohio State Legislature. So essentially, I'm normally I'd couch these sorts of stories with a lot of words like allegedly and, you know, according to reporting, but we don't have to do that in Ohio, because FirstEnergy conceded all of these facts in basically a deferred prosecution agreement with the Department of Justice. So none of this is really up for debate of what I'm about to say. So FirstEnergy paid $60 million funneled through dark money groups, or 501(c)(4) organizations, that they never disclosed their ties to, who then routed that money to the Speaker of the Ohio House of guiding Larry Householder, who used it to sort of build up his political machine, routed it to the primary independent expenditures and campaign expenditures on behalf of people who were running for the legislature who would support Householder. And it was basically a big trade where sort of Householder would get all these advocates into the House. In fact, in text messages and private communications, it was called Team Householder. And then he sort of leveraged the power of Team Householder to become House Speaker in a power struggle. And in exchange, he passed this notorious energy bill HB 6, which some smart people have called the worst piece of energy legislation of the century in the U.S. that bailed out FirstEnergy's coal and nuclear plants. It also delivered them a bunch of much sneakier, sort of harder for regular people to understand, rate making changes around decoupling that would basically recession-proof FirstEnergy so they couldn't lose money during an economic downturn, which turned out to be very useful for them when COVID hit. And, you know, as it happened as part of the deal it also killed Ohio's very meager renewable energy standards and energy efficiency standards. So it was sort of this Frankenstein monster of terrible energy policy. And the last thing that came out of these revelations, so Larry Householder was indicted as were five other lobbyists. FirstEnergy paid a $230 million fine to the federal government. The other thing that came out of it that FirstEnergy conceded is that they had been bribing the man who would become the chief regulator of the Public Utility Commission of Ohio. They paid him $4 million on the eve of his appointment, and it seems they had paid him upwards of $20 million over the previous decade. So a lot of dirty dealings from FirstEnergy and it really was to protect the viability of their monopoly and to protect the assets that were struggling to compete in the market.

EMP: Well, I just want to I just want to note that, you know, the subsidies that they obtained were at the expense of the consumers, right?

DP: They are. They’re at the expense of ratepayers. They totaled over a billion dollars. So we can talk more about this. But one of the things we want to point out in this petition to the FTC and we hope that they investigate is that you know, even in this case, where, through I think the hard work of federal law enforcement and to some degree dumb luck, this case was sort of fully fleshed out, exposed and prosecuted. The penalty that FirstEnergy paid, about a quarter of a billion dollars, was less than the benefit that they received from the passage of the law. And you know, even that penalty is not going back into the pockets of Ohio ratepayers. So there's really very little justice to come out of it. Some elements of HB 6 have been repealed. Some of the nuclear bailouts have been, interestingly, the plants that they were meant to bail out, still haven't shut down even absent the bailouts in part because, and this was, you know, advocates were screaming this from the rooftops throughout the whole debate, FirstEnergy never proved they actually needed the money to operate the plants. I mean, to some degree, the whole thing was a sham. It was really just a cash grab. But, yeah, customers have never been remunerated and there really hasn't been any you know, there's been a limited, I would say accountability for FirstEnergy, a large payment that they did, you know, was a one-time payment, they were basically able to write off with investors. And, you know, to me, that doesn't signal to the rest of the electric utility sector the necessary consequences that would deter them from this kind of behavior.

EMP: Yeah, I don't think many folks outside of the industry have a real clue as to the extent FirstEnergy had the Trump administration’s support for subsidies through FERC. And I would congratulate Neil Chatterjee for standing up to that and being with the majority in declining to adopt those subsidies. I'd love to have an episode on that at some time. I’ve reached out to Commissioner Chatterjee; hopefully he'll agree to come on. But what other instances what other examples would you say?

DP: Well, the current unfolding debacle in Florida is a good one because we can kind of talk about it in real time. So we learned after the 2020 election cycle -- that had been a very important election for the Florida State Legislature, which made it a very important election for Florida Power & Light. And just to set the stage a little bit, Florida Power & Light is one of if not the largest single electric utility, retail electric utility in the country in terms of the number of customers that it has. A very large company, very powerful company in Florida politics. And FPL has been kind of fighting these battles against rooftop solar development in Florida for years. So it goes back to 2016. There was a big sort of war between FPL and rooftop solar developers with dueling ballot initiatives to try to, on the part of the developers, to try to grow the rooftop solar market in Florida and on Florida Power & Light's part they were trying to quash it before it could really get going. So there have been longstanding tensions there. The Florida Senate in 2020 was very closely contested. It was a margin of just a few seats. And that makes all the difference. Party control in Florida’s Senate makes a big difference for FPL. The Florida Senate has a big role in appointing FPL’s regulators on the Public Service Commission. And of course it sets policy for the state. There were three elections that had Democratic incumbents and Republicans won by very close margins; in one case, just a couple of dozen votes. And in the aftermath, reporting started coming out that there were these candidates, these third-party candidates in those three elections, who didn't have a party affiliation, were unknown people who didn't attempt to campaign -- like nobody ever sort of saw them in person, but massive amounts of money were spent communicating with voters on their behalf. And this became known as this ghost candidate scandal. And in two of those three cases, these ghost candidates syphoned enough voters away from the Democratic candidate to swing the election toward the Republican. And all three of the Democrats were, you know, people who had bullseyes on them from Florida Power & Light. So my organization, Energy and Policy Institute, started looking into this shortly after the election when things looked pretty fishy a lot of credit to my colleagues down there. And my colleague in Florida, Alissa Schafer, who did a lot of great investigative work on this kind of trying to connect the dots. And the question was, what FPL or maybe some other interests have tried to prop up these ghost candidates to try to keep the Senate in the hands of Republicans. What we learned subsequently through a whole series of leaks and litigation that is too complicated to get into, but ultimately the information made its way to some very talented reporters who were able to decipher it, is that the ghost candidates were paid for and fronted and organized and put up by a group of political consultants who were being paid millions of dollars by Florida Power & Light. And FPL not only was paying these consultants who were behind the scheme, I should mention FPL denies their role in all of this and denies having committed any crimes or having done anything to sort of set up the ghost candidates scandal, but it is clear from the documents that have been leaked that they were paying the consultants who did it and that they had very high awareness of all of it at the highest levels of the company. And so through subsequent leaked materials, we've seen the CEO of Florida Power & Light, a man named Eric Silagy, not only aware of these activities, but directing them to some degree. There's an email that came out a week or two ago from Eric Silagy to his vice presidents at the company who are responsible for doing a lot of the interfacing with these groups, saying that of one of the one of the Democrats who was targeted in this ghost candidate scandal, who was a real champion for climate change issues and rooftop solar and a real thorn in the side of the utility, Eric Silagy wrote an email that he wanted them to make his life as miserable as they could. So, you know, really high awareness and direction coming from the utility to oust these guys not through, you know, not by giving campaign contributions to their opponents, which would be illegal, not through even sending ads or making independent expenditures against them or on behalf of their opponents, but through this incredibly convoluted chain of events that was designed almost entirely to disguise the utility’s involvement or anybody else's involvement really. And just literally to deceive and trick voters into pulling the lever for a person who wasn't even a serious candidate. And then there are a whole host of other scandals that have come out of these leaks. So these same consultants that FPL paid attempted to offer basically a job that didn't exist yet with a very high salary to a city councilor who was opposed to FPL’s bid to privatize the municipal utility in Jacksonville. These consultants, again working at the direction of FPL, apparently took over control of a quote/unquote, “conservative news site,” although it really was anything but. It was a new site that existed entirely to spread propaganda favorable to FPL and to smear and attack and bully any of its opponents. The same consultants paid by FPL hired a private investigator to follow and gather photographs and information about one reporter in particular, a guy named Nate Monroe who had been writing critically about FPL’s attempt to buy out this municipal utility in Jacksonville. And the list goes on and on and we keep getting new revelations really almost on a weekly basis. So, you know, people ask me all the time about the Ohio case. How typical could that be? That's got have just be really, you know, a bunch of terrible actors and FirstEnergy or real cultural problem at the high levels of that company. And I wish I could say that was true, but unfortunately, you know, there are a lot of similarities between the Ohio case and the Florida case: use of covert groups and dark money groups and attempting to, you know, really change the sort of fabric of democracy and elections, all on behalf of the utility preserving its monopoly. And, you know, we could get into other examples from other states too.

EMP: Yeah, we did an episode a little while back with Court Rich out of Arizona, which is the story in Arizona is incredible and, and I've tried to do an episode dedicated to the referendum that we saw in Nevada a few years back, where Warren Buffett's utility company -- to change the constitution, the state constitution, to allow electricity competition, the referendum had to pass twice. The first time the utility laid out and was just basically neutral and the referendum passed overwhelmingly. The second time around, they brought their guns out foursquare and, you know, pushed all this misinformation. And it was defeated roundly. So. You know. So I want to ask, in relation to that, you know, I mean, I asked Court, are the utilities in Arizona dealing with facts when they when they deal with the public? And he said no. How much of this is misinformation, outright falsehoods that you're dealing with?

DP: I will say that, I guess I'd agree with Court. I think largely utilities are, like many kind of unscrupulous political actors, will say basically what they think they need to say to accomplish their political agenda. I do think there's -- they often you know, they often take like something where there's a grain of truth and then pervert the argument pretty badly. So you know, as an example, just the first one that comes to mind since we're talking about competition issues -- utilities in the Southeast -- and this is another great example where a utility wants to make an argument but is too embarrassed to make it on its own, you know, on the merits from its own voice, so they'll do it through covert arrangements with paid third parties -- utilities in the Southeast are feeling very threatened right now by the prospect of forming an RTO in the Southeast and having competition at the wholesale level in the region, which has never existed and which they've always managed to stave off even in spite of FERC Order 1000 and other federal efforts to bring regional transmission planning and wholesale competition to the full country. The Southeast’s big monopoly utilities, Southern Company, Duke, Florida Power & Light, Dominion have always fought that off. And that effort is being attempted again, you know, by advocates of competition and large customers and, you know, and small customers to people who think that could lower power prices and bring more clean energy to the region. There's a group that has been paid by Dominion and Southern Company and possibly other utility interests, called Power for Tomorrow. It includes some former regulators who have kind of waltzed through the revolving door into industry. And they make these -- they were really, really opportunistic after the blackouts in Texas last winter, saying, oh, you know, this is all because of ERCOT, these blackouts, and this is all because of, you know, the perils of an RTO and any kind of wholesale market competition. And if you bring an RTO to the Southeast, we will also have blackouts and then some other crazy stuff about how like this is ceding control of the grid to companies like, you know, Google, which has been an advocate for wholesale market competition. And so like, that's kind of an example of where, first of all, I think that the utility feels some degree of pressure, right? The utility is accountable to some people. They're accountable to regulators, they're accountable to their investors. They do have some degree of, you know, public capital invested in their brand that they try to preserve. So I think they're a little reluctant to just lie out of their own mouths. But once they start kind of, you know, paying third parties to talk for them, then their relationship to the truth gets a little bit less important. And so, you know, are there are problems with how the RTOs ensure reliability and fair competition? Of course there are, alright, and I'm not here to defend ERCOT or any other RTO. You know, are there problems with those markets? Yes, absolutely. Those market rules are created by people with agendas and they need to be reformed and made better also. But the idea that, you know, bringing an RTO to the region would cause mass blackouts, which is what was being implied by this group, Power for Tomorrow, that's nonsense. And that was paid by -- those messages are being sponsored by the monopoly utilities. So, long story short, yes, I agree with Court. And you see this on rooftop solar issues as well all the time do you might be able to speak more to that but utilities constantly -- constantly -- do not tell the truth about the effects of rooftop solar on the wider customer base and on the grid. And, you know, sometimes they take something where there's a grain of truth and pervert that or pay other people to get really, really far from the truth.

EMP: Yeah, I started this podcast just before the Winter Storm Uri last year, and we've spent a lot of time trying to debunk some of the misinformation that has come out of Texas or has been directed at Texas since that terrible event. And you know, and during hot weather grid operators and utilities have routinely for decades put out warnings and asked customers to refrain from using electricity to prevent stress on the grid. And now in the wake of Winter Storm Yuri, you've got folks jumping on this as an excuse to advance their agenda. You know, we saw something like that back in 2003 when I was at FERC and was dealing with the Northeast blackout. The company responsible for that happened to be FirstEnergy. They failed to maintain their power lines. They failed to invest in computer equipment that would give them the vision they needed to prevent the blackout. But no, they hired some, you know, I’m doing air quotes here, they hired some consultants who blamed the blackout on competition. And so it seems like this is a regular part of the playbook for the utilities and other opponents of competition. Let's talk more about the FTC petition if we might. So you timed this to the new chairman of the FTC who made headlines recently with an action against Facebook -- excuse me, I guess it's Meta now. And does that action give you some encouragement that this petition will be favorably received?

JS: It does. I think we're seeing a new era of commissioners and commission leadership from FTC. You know, the FTC for a long time has not been as active as we would have hoped. There certainly has been a downturn in the number of actions and regulatory rulemakings that they've been doing. And I think the, you know, renaissance that we have right now is with Commissioner Khan and she herself was a, or has been, a very strong advocate for applying antitrust enforcement and law to the technology sector, and overwhelmingly was a bipartisan pick for that reason. And we've seen these, you know, strong pieces coming out from the commission. One of the issues that we're seeing with utilities right now is that we are in an era where the climate is real, the climate emergency is real. And we have an industry that is not suited for that challenge right now. You know, as we've seen, and as Dave has been talking about, the obstruction to renewable energy, the obstruction to people's choice for cleaner, more affordable and resilient energy, are all being obstructed by utilities and the monopolies they hold and the revenues they want to keep. So the modern era that we're in right now for utilities, the business model that utilities are working in are a hundred-year-old business model, and that absolutely needs to change given the circumstances of where we are on climate and the circumstances that we have for you know, disruptive technologies, air quotes again, for getting us where we need to go. So we are hopeful that Commissioner Khan and the commission in general really sees the writing on the wall and how important it is for the FTC to flex their muscles towards an industry that has pretty much been immunized for decades now from competition challenges.

EMP: Well, in your petition, you cite as an example the FTC’s antitrust investigation from 1928 to 1935, which is nearly a century ago. And under this authority, the FTC investigation led to a really profound -- a profound federal intervention in the electric utility industry of that time, which was dominated by just a few trusts. And so that led Congress to write sweeping laws to restructure the electric industry in the 1930s. And those laws include not just the Public Utility Holding Company Act, which was repealed in 2005, but also the Federal Power Act, which is the law, the nearly hundred-year-old law, which we're trying to use as the basis for getting into a 21st century clean energy economy. So what would you like to see this investigation do and result in? What is it you hope to achieve?

JS: So the 1930s investigation is a fantastic precedent to cite here, and really kind of spurred our intention to get the FTC to look at this issue again. At that point, one of the very interesting actions that utilities and trusts and holding companies were performing at that time, was actually trying to eliminate public energy companies and public utilities, in really asserting private utilities, and kind of control over the energy market at that time. Um, so I think that's a really interesting contrast because they were trying to eliminate public competition. So what we're trying to get the FTC to do right now, is something very similar to what they did in the 1930s. We are asking for a true industrywide survey and investigation of the number of anti-competitive and anti-democratic acts that utilities are unleashing across the country right now. Right now utilities are mostly regulated by state utility commissions and obviously FERC has also other federal jurisdiction over certain utility areas, including wholesale markets, but there hasn't really been any agency that has taken on a federal and national perspective of what utilities are doing as an industry. You know, as Dave was saying before, these patterns that we keep seeing, you know, popping up from individual states and tactics, dirty tactics that are being used against rooftop solar, they keep popping up in different states. But there hasn't been one body that has been able to take all of that and actually identify the patterns and how these are actually in violation of federal laws. It is the FTC’s mandate to look at how industry bastardizes competition and eliminates competition. That is FTC’s sole jurisdiction. That is exactly what is happening in the utility industry right now. It is incumbent on them to actually fulfill that commitment to look at the anti-competitive actions that utilities are taking. So we want that type of robust, deep, industrywide look to connect these individual actions together into a pattern. And from there, start looking at enforcement actions that can be taken by the FTC, but also the DOJ or other agencies, as well as looking at what are the recommendations that can be made, and potentially legislative recommendations, to fix this industry to be responsive to climate change. And to really defeat the types of abuses that we are seeing from utilities and the assaults they're making on our democracy right now.

EMP: Would you support a rewrite of the Federal Power Act to better promote competition in the industry?

DP: I would love to see better competition in the industry. And the more you can sort of like, address the issue at its roots. I'll let Jean comment on this as the actual lawyer of the group rather than me but, you know, it certainly would make a lot of things easier in terms of like judicial review and not having to pass kind of kludgy policy or regulatory policy, if we could reform some of the foundational acts that set the scope for regulation of the industry. With that said and given how difficult passing anything in Congress is right now, as you know, we're in a unique position to see at this current moment where we're trying to do climate policy review of the tax code, I don't know that the -- I don't think that's the only way to create reform. And there are, you know, that example from the 1920s and ‘30s, where FTC conducted these very, very deep, comprehensive investigations -- and I'll add, by the way, because I do think this parallel holds, over the incredibly strenuous objections of industry, I mean, an industry that at that time was weakened by its role in causing the Great Depression and unbelievable public antipathy, but still an industry that did everything possible to avoid that kind of scrutiny. And the result of that was the passage of big congressional omnibus, you know, Public Utility Holding Company Act. Could that happen again? I would love to see that happen again. And you know, I wouldn't discount it. You know, there are, I think, Jean was talking about Commissioner Khan’s approach to the tech industry and I think there's some parallels there in terms of how much maybe surprisingly support addressing monopoly and antitrust issues in big tech has had across the political spectrum, including from Republicans. And maybe there's a world where that can happen in utilities too. A lot of the issues are parallel. But even absent that I think there are a lot of, I don't want to say smaller, but more incremental changes that could come out of an FTC (6)b investigation. So just as one small example. You know, a lot of the issues that we -- a lot of these political corruption issues that we're looking at, if you are able to get, you know, dig your hands into the actual accounting of the utilities, a lot of this stuff these, you know, corrupt campaigns, these political machines and contributions, a lot of that money originates from customers, which really is against code now. I mean, there are laws on the books, there are regulatory precedents on the books that utilities are not supposed to use their customers’ money to fund their political advocacy, and they're not being enforced. And so there are a lot of things that current regulators, if they were inclined to do it and had the facts at their disposal, there are a lot of things that they could do to crack down on that practice. And, you know, a lot of regulators are captured, that's kind of the old chicken-and-egg problem of this industry. But there are some regulators who absolutely are, you know, acting in good faith and disgusted by this stuff, and they just don't have the resources to conduct these kinds of investigations. I mean, they're constant, they're barely able to keep up with rate cases. So to have FTC come in and unearth all that I do think could create, you know, room for other regulators at FERC or state PUCs or state legislatures or Congress to come in and say okay, FTC used its very impressive investigative powers, subpoena power, you know, ability to compel testimony, et cetera, to document these problems and we think there are some solutions, and we will implement them. So the long answer to your question, Bryan, but sure, I mean, there if I could rewrite the Federal Power Act, there's probably a lot of changes that I would make, that even go beyond questions of competition, if I had that magical pen. But given the difficulty of that, I would say that, you know, can set the bar in a slightly different place in the sense that the FTC probably can reveal a lot that can become the impetus for its own enforcement actions, as Jean mentioned, and also for actions of other regulators and legislators, many of whom I think generally are appalled by these problems and would like to solve them if they have the tools at their disposal to do it.

JS: And I would say there are very, you know, we're seeing probably Gen 3 of attacks on community and rooftop solar in this country by utilities. I mean, it is amazing to see the first wave of fixed fees, the second wave of trying to just gut NEM legislation altogether, net metering legislation altogether, and now we're seeing, you know, a third wave of interesting things that kind of go under the radar, like interconnection delays of community solar and rooftop solar customers. Those are things that the PUCs, the utility commissions, are not necessarily approving. We know that in Minnesota for example, Xcel was delaying -- severely delaying -- solar developers from interconnecting onto the grid. 75% of developers reported severe delays and some of them ended up not doing their projects all together. And these are the types of things where, you know solar developers are not in a position to bring their own antitrust lawsuits against utilities because they are absolutely reliant on utilities to actually connect, get connected to the grid. That is a case study example of exactly what the FTC needs to look at. It's when people -- antitrust cases are extremely expensive. There's many reasons why people don't go bring them. They're extremely complex in terms of proving the economic harms that derive from anticompetitive action. The FTC has those resources. Everyday solar developers who are on the verge of bankruptcy every day do not have those resources, and nor do everyday rooftop customers. So these are the types of actions that need policing, and that need daylight brought onto them because they are occurring under the radar of utility commissions as well as the public.

EMP: David, I was glad you mentioned regulatory capture, which is a huge part of this. But it's also occurred to me in recent years that it's not just regulatory capture, but legislative capture, and they go hand-in-hand. You could have a regulator who is keen to act in support of your agenda, but the legislature might be dependent -- as they seem to be in most every state -- the legislatures are captured by the utility companies because they're huge, rich companies, and they are very generous with their political donations to those who support their agenda. What can the FTC do to end that?

DP: Yeah, great question. And you're right. It's capture up and down and side to side. I mean, utilities are sort of like, politically, they're like electrons that flow to the path of least resistance. Utilities manage to sort of flow their influence to the parts of the political system that are most receptive to it. And so you know, we it is an even sharper example, but like, utilities, where they've kind of fallen out of favor with their regulators at the PUC, which has happened, you know, when they ask for too much or go too far some good regulators fight that either via election or appointment end up in office. They say, okay, well, we'll just, you know, try to do everything we want to do via the legislature where we have more control or even -- and there's a couple of recent cases of this -- attempt to, you know, if they found themselves in hot water with the commission, because the commission is elected, maybe we'll try to pass a change so that the commission becomes appointed, and they can have better luck that way. So, yes to your premise. You know, what can the FTC do about regulatory capture? Well, there's some things they can't do, right? They can't pass campaign finance reform, which is kind of an underlying problem to this whole dynamic. But there's some things they can just by unearthing the problem. So you know, to go back to what Jean was saying, we need documentation of all of this in the nitty gritty, and that's what EPI tries to do. So obviously, I'm biased toward that approach. But we're advocates and you know, first of all, we like have a bias which we're not shy about. But more importantly, our work doesn't have the imprimatur of a federal agency. And then also, we don't have -- we can't compel documents from utilities. I mean, we do our best, but FTC can ask questions of utilities. They can ask for internal correspondence, they can ask for data, including about regulatory capture if they so choose. And you know, that may be a step beyond or tangential to sort of some of the core antitrust and anticompetition questions. But I think as we've discussed here, it's kind of like the glue that holds the whole utility machine together, right? I mean, they're using their regulatory capture tools in direct service of trying to prevent competition and fair competition. So I do think it's within the scope of FTC to ask questions to sort of fully flesh out and throw into the harsh light of day details about how utilities capture their regulators. And then again, you know, maybe there are actions that other legislators or regulators could take in response to that. It could be campaign finance-related things. Or, you know, I hinted at this earlier, but there are things that regulators can do, just to force utilities to disclose a lot of their spending, what accounts it's coming from. And, you know, we've seen that that can be a fairly powerful deterrent. It's probably not enough, but it's at least a starting point that that many states and parts of the federal government could do and very hard to do without the sort of full -- as full a picture as you can obtain of the, you know, the whole capture machine at your disposal. I think FTC is in a unique position to be able to expose that.

EMP: So are there any filings now in response? I mean, you made this filing back in mid-June. You know, my familiarity with FERC is there's a filing and then there are counter filings. I assume FTC’s got a similar regulatory, administrative rather, approach.

JS: So this, this instrument is an open petition to the FTC. So they will have to decide as to how to approach this. So it doesn't start in administrative rulemaking. It basically is an open public request and petition for them to launch an investigation. 

EMP: Well, has anybody contacted the FTC and said, you know, this is not something you should engage in, or is that happening all sub rosa?

JS: That's not publicly available to us. But we do know that, in addition to our 200-some organizations that represent consumer rights as well as solar companies, that there have been additional groups that have been weighing into to ask the FTC to do this. We do know that the FTC has received this document and is considering how to approach it, which is very encouraging. And I think it all just speaks to this crisis moment that we're in with our power system and utilities. It's not only a climate issue right now, it's an affordability issue right now and an energy insecurity issue. And so I think there's many different political forces that are at play that really focus on the need to put the utility industry under a microscopic lens right now. So we are hopeful that there will be some action made on this petition from an overwhelming public outcry for this.

EMP: Well, I read through the groups that signed on to this and a lot of them are interrelated and part of a larger group, but I don't mean to downplay the significance of the wide range of people you've got supporting this. But I was curious to see that the Solar Energy Industries Association was not there. Or did I miss that? Did you approach them about this and did they decline and was it because they were afraid of antagonizing the utilities?

JS: We did a wide call. And so there are specific solar, especially rooftop solar companies, that signed on to this including companies like Sunnova. I think SEIA has their own, you know, perspective on and I will not speak on their behalf. But I think that they, they were, you know, approached and thinking about how to approach something like this. There's definitely a lot of interesting -- when we talk about the solar industry, including you know, how they're reacting to the current bill – they are certainly different motivations or how they think that different you know, solar industry sectors will thrive or not thrive under, you know, whether it is a future that actually encourages more distributed energy resources or whether it is an industry sector move to support more utility-scale issues. And so we know that as industries and industry associations go, they also have to balance many of these different opinions about where people want to see federal action going.

EMP: That was very diplomatic. Thank you.

DP: Jean’s always diplomatic. I'll offer one other bit of -- one other diplomatic note and this is not specific to SEIA but any solar stakeholder, industry group, solar company, et cetera, is like Jean talked about this before, and I think it's really important. When you are dealing with, an industry like the utilities who have monopolies over the distribution grid, at least and sometimes much more. It is a lot to ask companies who are dependent on them at the end of the day for interconnection at a minimum, to take them on directly. It's sort of like, and I know this is kind of an inflammatory metaphor, but I think it's apt. It's kind of like dealing with like a mafia boss running a protection scheme. It's very uncomfortable to be the first person to like pick on a bully or to take on a bully or to take on somebody who's running that kind of a racket, right? Because if they're big enough to crush you, what do you, you know, where's the return in that? And all these companies are trying to employ people and stay afloat and all that stuff. And so, I don't begrudge, and by the way, that extends beyond the solar industry. EPI has done a lot of reporting on how utilities we talked about utility capture of regulators and legislators. Utilities also have very robust efforts to sort of capture large swaths of civil society. So they give they make really large charitable contributions to groups and then ask those groups either to support them in the regulatory sphere, or at least not to oppose them and sort of buy their acquiescence. And so I don't feel any ill will toward a solar company, you know, civil rights group, civil society group, a church, anyone who says, we really can't pick on the people who literally provide us with electricity or provide us with interconnection to the grid. That's sort of the key to our business. You know, some of those groups, I think, display really almost unwarranted and impressive courage in being willing to take on utilities and that's a credit to them. Some, you know, as an example, not from solar, but from this civil society space, you know, there are charitable groups who have turned down utility money or given it back so that they could feel unencumbered to speak out against utilities and sort of be able to speak truth in that way. So I'm appreciative of those groups. I don't hold any ill will toward people who are, you know, not able or ready to sort of step out and, you know, take on the bully. But that's partly what groups like the Center for Biological Diversity and EPI are trying to do and to get back to our topic of the day, I suppose, that's part of why we're asking for this petition. It's like that's what we're supposed to have government for is to protect people from that sort of economic bullying. So you know, I think in an ideal world and so what we're asking for, you have someone like the FTC to investigate those practices so that groups who are, you know, necessarily fearful of and dependent on the utilities don't have to do it for themselves.

EMP: Yeah. Well, I wanted to definitely shed a spotlight on that because it is not just regulatory capture; there is fear. Many people who would support a more competitive outcome in this industry, which would help us in the climate battle that we're facing, are just reluctant or fearful to do so because they can't afford to antagonize the utility -- the monopoly utility. So I appreciate your participation here today. This has been a great conversation. David and Jean, thank you very much. I hope we can do something like this again. 

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