A recent estimate by Economic Liberties suggests addressing utilities’ excessive profits could save American families nearly $500 per year

Washington, D.C. — With residential electricity prices up 33% since 2019 and one-third of households now spending over 5% of their income on electricity bills, today the American Economic Liberties Project released a new issue brief, “How Congress and the Federal Energy Regulatory Commission Can Lower Electric Utility Bills,” that examines the role of state and federal regulators in overseeing utilities. The brief lays out a comprehensive set of federal policy recommendations for reducing household electricity bills, underscoring the power Congress does, in fact, have when it comes to curbing historically high utility costs.

“Americans are paying more for electricity because the rules governing utility monopolies are tilted in favor of excessive profits and weak oversight,” said Marissa Paslick Gillett, Senior Fellow at the American Economic Liberties Project and a former chairman of the Connecticut Public Utilities Commission. “The good news is Congress and FERC have the tools to rein in these abuses. By limiting inflated returns, restoring accountability, and banning utilities from foisting political and lobbying costs onto customers, our legislators can deliver immediate and meaningful relief to families.”

The brief breaks down the state of affairs shaping Americans’ electricity bills, highlighting how incumbent investor-owned utilities have squashed competition in transmission markets resulting in persistent anti-competitive practices and higher costs. The brief also explores how the Federal Energy Regulatory Commission (FERC) regulates utilities and how its practices have driven up electricity prices. FERC’s formula ratemaking approach, for instance, presumes transmission providers’ expenditures are prudent and reasonable, unjustly shifting the burden to under-resourced customers and advocates. Meanwhile, investor-owned utilities secure inflated returns and even pass the cost of corporate political spending onto customers, which FERC declined to remedy just earlier this month.

The report ends with a comprehensive Congressional action plan for lowering Americans’ utility bills, consisting of proposals to:

• Cap transmission returns at utilities’ actual cost of capital to curb excess profits and lower household electricity costs. Such reforms at the state and federal level can save American families nearly $500 a year.
• Eliminate FERC’s practice of layering incentives on top of already-bloated returns by ending unnecessary incentive adders that boost utility profits without delivering additional benefits.
• Require FERC to ban utilities from passing political and lobbying costs onto customers in their monthly bills.
• Reverse the presumption that transmission spending is prudent, rightfully returning the burden to utilities to justify their costs.
• Strengthen FERC’s data collection practices and require greater transparency and more effective oversight by proactively sharing transmission data with state regulators.

Read the full issue brief, “How Congress and the Federal Energy Regulatory Commission Can Lower Electric Utility Bills,” here.

Learn more about Economic Liberties here.