A wave of consolidation has swept across the U.S. economy over the past decade, reshaping already-powerful corporations into financial and political powerhouses. The trend has taken particular hold among electric utilities, a sector where monopoly reigns virtually unchecked.
Consolidated, investor-owned utilities now have service territories that span several states and include millions of customers. They say gobbling competitors delivers operational efficiencies and cost savings. But who sees the benefits? And what are the unspoken costs?
This report explains how concentration of power in monopoly utilities delivers fewer customer benefits than alleged, and how the unmentioned costs of concentrating power in a few firms undermines protection of the public interest.
Despite efforts to cast consolidation as customer-friendly, the benefits are heavily weighted in favor of utility shareholders.
Unequal Financial Benefits
Most utility mergers feature large benefits for company shareholders, but much smaller benefits for customers. When Exelon, the nation’s largest nuclear power generator, unveiled in 2014 its plan to swallow Washington, D.C.-based utility Pepco in a $6.8 billion deal, it pledged $100 million toward a fund earmarked for rate credits, low-income assistance, and energy efficiency across its multi-state territory. That translates to just $50 per customer, compared with the whopping $1.1 billion that the merger unlocked for Pepco shareholders.
Unspoken Costs to Competition
As they grow larger through consolidation, utilities use their size as cover from competitive markets. Mergers help preserve monopoly utilities’ market share, even amid a dramatic shift in how Americans can generate, consume, and engage with our energy. Continue reading