In the United States, utility companies are supposed to be regulated by public boards and commissions, ensuring the best interests of customers are protected. Unfortunately, these entities are often filled not with individuals focused on the public good, but with partisans favoring utility companies. These partisans put their desires ahead of the public’s needs.

Nonprofit newsroom Floodlight recently published a report claiming that 25 investor-owned utility companies in the US have channeled at least $215 million to dark money groups. The goal of this dark money is to promote the election of sympathetic state legislators. This has resulted in higher electricity prices and hindered the implementation of renewable energy plans.

The use of dark money makes it difficult to trace the full extent of spending, and some utility companies have engaged in questionable practices.

An egregious example occurred in Ohio, where FirstEnergy Corporation struck a deal with state legislator Larry Householder (who has since been sentenced to 20 years in prison). The deal led to a bailout for struggling nuclear power plants. FirstEnergy Corporation used dark money groups to launder money for the Householder deal.

Similar practices have been observed in Florida. In 2018 and 2020, Florida Power & Light (FPL) paid millions to dark money groups to try to defeat Mayor Philip Stoddard of South Miami. Stoddard advocated for more rooftop solar and criticized FPL’s nuclear power plant.

The Internal Revenue Service (IRS) oversees nonprofit groups, but the regulation of dark money remains challenging due to limited resources and political risks. The current tax code places a high priority on protecting the privacy of individual taxpayers. As a result, it inadvertently enables the misuse of dark money for political purposes.

Lobbyists and lawyers have exploited the IRS code to shield their clients’ questionable activities from public scrutiny, perpetuating an opaque system. This lack of transparency and political cronyism in the utility sector keeps electricity costs in the US higher than necessary. In a monopolistic environment, it is the consumers who bear the brunt of these machinations.