Utility bills are up by double-digit figures across much of the country and, increasingly, people can’t keep up. A quarter of U.S. households have been unable to pay their utility bill in full at least once over 12 months.
Americans need help. And while politicians talk relentlessly about affordability, elected officials are in a perfect position to deliver on their promises when it comes to utility costs: They can become intervenors in utility rate cases, bringing the power of their platforms and the resources of their offices to advocating directly for affordable utility bills by participating in an official capacity in the rate-setting process. It’s an underused opportunity.
Investor-owned utilities (IOUs) are government-sanctioned monopolies, where one company functions as the sole distributor of electricity in a geographic area. This is why these monopolies must file rate cases, essentially arguments as to why they should be able to increase what they charge customers, with state public utility commissions (PUCs).
This system is intended to keep utilities from abusing their market power. But it’s not working that way. IOU profits have soared while customer debt has skyrocketed. IOUs provide 70 percent of American households with electricity, while the rest receive power from publicly owned utilities or cooperatives. For consumers billed by IOUs, the cost of electricity has risen by 49 percent higher than inflation over the last three years. Meanwhile, consumers receiving electricity from IOUs’ publicly owned counterparts have seen their bills rise far below inflation.
Because the PUCs set guaranteed returns on their investments, IOUs are motivated to maximize returns for their investors by overspending on superfluous and inefficient infrastructure investments; the larger the capital investment, the more the utility earns for its shareholders. Indeed, the average authorized return on equity for an IOU is 9.6 percent — even higher than the documented expectations of Wall Street asset managers, who average 6.7 percent.
And the gravy train shows no signs of ending. In the first two quarters of this year, PUCs received or approved $29 billion in rate case hikes. Those hikes are partially to recoup the $530 million that IOUs paid their chief executive officers in 2024. Between 2019 and 2023, the Energy and Policy Institute reported that utility CEOs pocketed $3 billion while the utilities they manage disconnected millions of customers.
The system is clearly broken. This is where intervenors come in. Elected officials can file to participate directly in rate cases where they can advocate for lower prices and customer service reforms. While the general public can only participate in one step of a rate case, elected representatives who intervene in an official capacity can scrutinize IOUs’ financial records, their shareholder payouts and their justification for charging higher prices.
IOUs claim that rate cases factor in public input, but the facts tell a different story. Residents can take part in public comment, but they can’t participate in hearings where expert witnesses are cross-examined and rates of return are negotiated. Moreover, in the majority of states public comment is not even directly considered by the state regulator in its decision-making process, as the comments are not viewed as “evidence.” And, of course, IOUs can easily outmuscle any constituent by dedicating hundreds of thousands of dollars for legal counsel, private research and expert testimony. And in most states, the utility’s expenses for putting on the rate case are embedded as part of the rate increase — the utility is literally paid by its customers to seek higher rates.
This is where trained intervenors, including elected officials, come in, with the voice of their community and backing of programs like state intervenor funds. Elected representatives and their staffs can spend the time it takes to follow the paper trail, submit testimony and question the IOU so that the state regulators can gain a better picture of the real justification for price hikes. Importantly, a state regulator can make a decision based only on the evidence in the record, so when consumer voices aren’t fully represented at the table, the outcomes can be devastating.
A recent poll shows nearly half of all Americans say that prices and affordability are the worst they have been in their lifetimes. Energy costs are a huge part of that, and the problem is likely to get worse. If elected officials want to deliver for their constituents, they need to become intervenors, injecting transparency, pushing back on rubber-stamp rate hikes and putting consumers where they belong: at the center of energy policy.
Marissa Gillett is a senior fellow at the American Economic Liberties Project and a former chair of the Connecticut Public Utilities Regulatory Authority. Lilly Solomon is a policy and advocacy associate at the American Economic Liberties Project.
Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
