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Federal Trade Commission Petitioned To Investigate Electric Utilities

  • May 25, 2022
  • 139 views
Source: 
Mondaq Business Briefing

On May 18, a coalition of 235 consumer, environmental, and public interest groups penned a petition urging the Federal Trade Commission ("FTC") to investigate alleged anticompetitive business practices undertaken by electric utilities, pursuant to Article 6(b) of the FTC Act, which empowers the agency to conduct a broad investigative study and request information. Sec. 6(b), 15 U.S.C. § 46(b).

The 42-page petition asks the FTC to investigate how certain unfair competition and deceptive acts allegedly undertaken by electric utilities are purportedly harming both renewable energy companies competitions with those utilities and consumers. 

According to the petition, electric utilities engage in unfair competitive acts to protect market monopolies and to obstruct deployment of affordable, renewable energy. For example, the coalition asserts that electric utilities actively block transmission development that would help enable competition and engage in lobbying efforts and political activity that undermine competition. They also impose unfair fees on rooftop solar energy producers in an effort to discourage customers from adopting solar energy, according to the petition. The utilities are said to purposefully use their authority over distribution grids to deny or delay distributed energy deployment, ultimately increasing costs. The coalition also alleges that unfair mergers between electric utilities raise prices and lead to fewer renewable energy options, citing a pattern of rate increases following successful mergers.

The petition also claims that electric utilities engage in unfair and deceptive acts that harm consumers by driving up their electricity bills. For example, the petition alleges that utilities engage in bribery, fraud, and voting interference to get pro-utility legislation passed and financially support or provide political favors to elected officials who represent utility interests. The petition includes a number of examples of utilities allegedly bribing members of state legislatures or engaging consultants to facilitate schemes to siphon votes away from candidates who would otherwise hold utility companies accountable.

The coalition urges the FTC to "safeguard democracy from undue corporate influence" by using its power under the FTC Act to conduct an Article 6(b) study of the electric utility industry. Section 6(b) gives the FTC broad subpoena power to request information from people, partnerships, and corporations (except for banks, savings and loan institutions). The FTC has used this power to study the practices of specific industries using information requests to selected companies in that industry. The coalition lists proposed outcomes of the investigation in its letter, including:

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  • Recommendations for federal and state enforcement actions against electric utilities that have committed abuses;
  • Proposed legislative and regulatory reform to address and prevent utility abuses that lead to consumer and competitor harms;
  • Proposed reform to state action immunity defenses in antitrust law; and
  • Recommendations that the FTC address governance and procedures for RTOs and ISOs.

Takeaways: An FTC 6(b) investigation could have broad impacts on the electric utility industry. The FTC has conducted this type of investigation in the sector—for example, a 1935 investigation laid the groundwork for the passage of the Public Utility Holding Company Act of 1935. Further, in addition to imposing potentially substantial burdens on the subjects of the potential FTC investigation, such a wide-ranging investigation may lead to FTC enforcement actions - the FTC now has a Democratic majority in place with the recent confirmation of Commissioner Alvaro Bedoya - or even legislative or regulatory reform. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr John Carroll

Sheppard Mullin Richter & Hampton

333 Hope Street, 48th Floor

Los Angeles

California

90071

UNITED STATES

Fax: 2136201398

E-mail: mbennett@sheppardmullin.com

URL: www.sheppardmullin.com

 

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