Doused by illegal federal actions and swamped by a mounting affordability crisis, the climate movement can re-ignite by targeting for-profit utilities. Many in the climate movement have been demoralized by the Trump administration’s evisceration of the Inflation Reduction Act. Inflation, tariffs, and data centers have put climate concerns in the back seat to affordability among political leaders and ordinary Americans. Meanwhile, utility companies have clung to slow, expensive fossil fuel infrastructure that pads their bottom line, rather than making fast and affordable clean energy investments. Climate leaders can revitalize the movement by rallying against excessive utility profits and showing how climate-friendly, local clean energy policies can bring relief to the millions of Americans struggling to pay their bills.
Utilities have earned the opportunity to be villains. While delivering an essential public service, for-profit electric utilities make billions of dollars per year from inflated profits alone. Multiple studies suggest that the average American household, given no choice over the utility that delivers their electricity, pays nearly $300 extra per year to pad the wallets of utility shareholders. This pain disproportionately falls on historically marginalized communities and low-income households. Utilities pour these ill-gotten gains into political donations, advertising, and lavish retreats to forestall any serious accountability from state utility regulators.
Utilities have also delayed the energy transition by using their monopoly over the grid to hinder clean energy deployment. Utilities block grid connections for community solar, lobby to cut compensation for rooftop solar, and deliberately avoid building new power lines to connect affordable clean energy that might harm their own bottom line. As a result, polluting coal and methane gas power plants stay online longer, accelerating climate change and further burdening consumers with costly power bills.
Utilities have seized upon data centers to double down on their love for costly fossil fuels and the attendant profits. Georgia Power, for example, told regulators they need to build numerous new methane gas-fired power plants to meet a utility-projected 10,000 megawatts of new capacity. With a lifetime of 40 years or more, the plants would burden the atmosphere and utility customers with volatile prices and high costs for decades. They’d also enrich the utility, which makes an excessive profit on top of the cost of building new power plants and other infrastructure — even when other measures like energy efficiency would cost ratepayers less. Georgia utility regulatory staff noted that the planned gas plant buildout would double the utility’s “ratebase,” sharply increasing utility bills across the board. Like all for-profit utilities, Georgia Power’s excessive profit rate gives it a strong bias to build, build, build (mostly dirty energy).
Slaying the utility profit monster lowers bills and opens the door to many more affordable, emission-reducing solutions. Obviously, lower profits paid to utility shareholders means lower bills. Additionally, curtailing excessive profit margins for building new stuff also means that utilities have a reduced incentive to do so — and to block energy efficiency, independently owned clean energy, and other climate-friendly measures that don’t make them money. In other words, cutting utility profits unlocks more opportunity for community-owned clean energy resources that lower bills and build wealth.
Marrying affordability and climate means switching from utility-owned fossil fueled power plants to independently owned clean ones. Policies like distributed power plants, for example, explicitly pay consumers and entrepreneurs fair value for meeting the needs of the grid. Laws enabling community solar and plug-in solar can ensure that people who don’t own a sunny rooftop can still transition to clean energy while reducing their bills. All of these policies reduce the utility ratebase, which puts additional downward pressure on electricity bills. But as long as utilities make double-digit profits on fossil fuel infrastructure investments, they’ll have the incentive, power, and money to stymie these urgently-needed policy shifts.
Utilities have never been friends in the fight against climate change, nor champions of affordability. Even amid backsliding at the federal level, the climate movement can make real progress in states and localities by targeting excessive utility profits and promoting non-utility clean energy.
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