The utility lobby is spending your money to make sure you keep paying more for your electricity. That is not a conspiracy theory. It is how the system works, and it works exactly as designed.
The Edison Electric Institute is the lobbying arm of investor-owned electric utilities. It spends tens of millions of dollars a year in Washington and state capitals fighting competition and blocking reform. You are paying for it. Lobbying costs run through the rate base, approved by regulators, and billed to you every month. Your utility is using your money to fight innovations, stopping reforms that will lower your bill.
The business model is simple and perverse. Utilities are guaranteed a return on every dollar they spend on infrastructure — typically eight to ten percent. The more they spend, the more they earn. There is no reward for finding a cheaper solution. There is no penalty for gold-plating. The incentive is always to build bigger, spend more, and pass the cost to ratepayers. That is not a market. That is a toll booth with a guaranteed profit margin.
To protect that model, utilities have built three layers of defense.
The first is the exclusive franchise territory. No competitor can sell you electricity. No one can offer you a better deal. You have one choice, and that choice is regulated to earn its investors a comfortable return, no matter how inefficiently it operates.
The second is no competitive bidding for transmission or the right of first refusal. More than a dozen states — Indiana, Minnesota, Iowa, the Dakotas, Montana, Texas, Oklahoma, and others — have laws requiring that when new transmission is needed, the incumbent utility gets first crack at building it, regardless of whether a competitor could do it faster or cheaper. Utilities wrote these laws and paid to pass them. The part of the grid that most needs competition is legally protected from it.
The third is cost allocation. When a transmission line is built, ratepayers in multiple states pay for it whether they benefit or not. The process is technical, opaque, and dominated by utility lawyers. Customers who didn’t want the line, didn’t need the line, and won’t use its power still get the bill. This is not an oversight. It is strategy.
On top of all this sits the single-price auction. In most wholesale electricity markets, every generator gets paid the same price — the price set by the last, most expensive unit called upon. A wind farm that bids near zero collects the same rate as the gas plant that set the ceiling. Think of a store that charges every customer the highest price any customer paid that day, no matter what they originally agreed to pay. That is the electricity market. The windfall goes to generators. The cost goes to you.
Reliable gas, coal, and nuclear plants that keep the lights on when the wind doesn’t blow or the sun doesn’t shine are being squeezed out by this same design. They are kept on life support with capacity payments — another charge layered onto your bill to compensate for the reliability this perverse market structure is destroying. This is why it is hard to get new coal, natural gas, and nuclear plants built outside vertically integrated monopoly utilities.
None of this has to stay this way, not if we want reliable, affordable electricity. States chose to pass right-of-first-refusal laws. Regulators chose to put lobbying costs in the rate base. Grid operators chose market rules that produce windfalls for wind and solar generators. And utilities chose to spend ratepayer money on the political operation that keeps it all in place.
The fix is not complicated. End the right of first refusal. Require competitive bidding for transmission. Remove lobbying costs from the rate base. Replace the single clearing price with pay-as-bid, where generators collect what they actually bid, not a windfall set by someone else.
None of this dismantles the utility industry. It only requires the utility industry to compete.
That is exactly what they are using your money to prevent: real competition.
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