For years, the debate over what role power utilities should play in the energy transition was mostly relegated to the wonkier backwaters of energy policy.
But that was before evidence came to light showing how power companies have been using ratepayer money to lobby against there being any energy transition at all.
A report published in the Guardian last week found that American power utilities have spent more than $215 million on political lobbying through dark money groups, including to block laws promoting renewable energy.
This isn’t the first time that investor-owned utilities have been shown to influence climate policy, as InfluenceMap showed last year, but it's the first to put such a high figure on these efforts.
Big utilities lobbying against renewables seems contradictory when you consider that they stand to gain the most from recent climate spending bills. The Inflation Reduction Act created tax incentives for low-carbon hydrogen fuel production, carbon capture and low-carbon fuel production that overwhelmingly favor incumbent power companies.
That came after the 2021 Infrastructure Investment and Jobs Act (IIJA), which created schemes like the GRIP Program that set aside more than $10 billion specifically for big utilities to build a more resilient grid.
So with so many incentives to support utilities in their transition to renewables, why are power companies still spending ratepayer money to stop them?
Part of the answer is that some power companies want to have their cake at the federal level while eating it at the local level, too.
Most of the anti-climate lobbying reported in the Guardian and InfluenceMap was targeted at state and municipal laws, where state-wide power companies have far more political influence.
An InfluenceMap report from 2022 found that in states with little or no meaningful climate policy, nearly all power utilities in those states had lobbied against renewables. Such was the case in “red” states, like Alabama, Georgia and West Virginia. But even in Connecticut, where studying climate change is now compulsory in public schools, a Brown University study found that environmental groups were outspent 8-to-1 by business groups, including power companies, on climate legislation.
So while utilities may be happy to collect federal tax breaks handed down from Washington, most have tended to push back harder at home.
This contrast points to the shortcomings of tax incentives as a carrot for taking climate action, not that the point needed to be made.
Just look at the case of DC Solar, where a California mobile solar startup founder caught a 30-year sentence in federal prison for fraud after swindling investors out of nearly $1 billion.
DC Solar sold mobile solar units that did not work, and often did not exist, for years before being caught, in large part because most of their investors were interested in collecting a generous investment tax credit for solar projects, and never bothered to check if the company was producing anything other than thin air.
The DC Solar example is perhaps an extreme case, but highlights how well-intentioned tax incentives for climate solutions does not guarantee a good-faith effort to fight climate change.
It should be noted that some utilities in the InfluenceMap report stood out for their alignment with the Paris Climate Accords goals. Edison International, Exelon Corporation, and Public Service Enterprise Company each got high marks from InfluenceMap for their investments in wind, solar and energy storage.
Another reason that anti-climate lobbying goes unpunished is because the nature of dark money groups make them a perfect shelter for lobbying dollars.
Dark money political funds are typically structured as non-profit organizations, which creates a two-fold perception problem for the IRS when they enforce political spending rules. The tax agency is wary of pursuing political organizations in an age when accusations of politically motivated witch-hunts are at an all-time high.
And when they do, the penalties for such crimes pale in comparison to tax evasion. The low-return to high-risk ratio often confirms suspicions that the only reason for IRS investigations is political, so the agency has largely dropped its pursuit of dark money political funds.
This is the context in which regulators in states and cities across the United States are debating whether utilities or private companies should take the lead in building charging networks to power the millions of EVs expected to hit American roads in the coming decade.
By 2030, 40% of new cars and trucks sold in the United States will be fully electric, far outstripping the current capacity of charging networks.
The Biden Administration has already put up $51 million to build chargers along federal interstates, but thousands more stations will need to be built to meet demand between and among cities.
The Charge Ahead Partnership, which consists of fuel retailers, grocery chains, convenience stores, and gas stations, argues that private businesses are best suited to build EV chargers. They believe that retailers with experience in selling products to consumers are more capable of providing reliable charging infrastructure.
Aside from their obvious financial interest, the group says they are concerned that electric utilities, with their established monopoly and access to ratepayer funds, will dominate the market and stifle charging startups like TerraWatt and Qwello.
Some states have imposed limits on utilities using ratepayer money for charging networks to ensure that private industry can operate in areas where utilities cannot. But in other states like Minnesota and Colorado, regulators are considering allowing utilities to bill ratepayers for EV charging infrastructure.
Proponents of utility-owned charging argue that utilities have the expertise and resources to make strategic investments in charging infrastructure. They also point out that private companies may not be able to serve certain areas, such as low-income apartment complexes, without utility involvement.
Apart from the ownership debate, unique intricacies of the EV charging business mean that utilities will have to re-write some common rules for charging startups to succeed.
Many utilities bill companies “demand charges”, which charge commercial users several times an hour to help regulate demand and keep the grid stable. But that is proving to be a challenge to the business model for EV charging.
Customers (understandably) want EV charging to go fast, requiring charging points to carry high power capacity despite a relatively low energy output per charge. Without re-negotiating these demand costs, EV charging stations will continue to face sudden price spikes and unpredictable costs for their customers without getting much in return per car charge.
As these debates play out across the United States, the first thing to position power companies in favor of climate solutions may well be the cripplingly expensive effects of climate change on everything utilities do today.
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