[Previous posts in this series: #1]
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When I was a political science grad student studying regulatory agencies, people in my field used to say that bureaucratic politics scholarship was like the parable of the blind men and the elephant. Each person comes up with different sense of “what regulatory agencies are like” depending upon the part of the whole (i.e., the specific agency) on which they are focusing.
Something similar could be said about electric utilities.
Our balkanized information and social systems push some climate advocates to paint villainous pictures of utilities in their mind’s eye. Why? Without repeated exposure to (and dialogue with) people who belong to opposing groups, those opponents’ legitimate concerns fade into insignificance in our mind’s eye, or come to seem insincere or pretextual. And we fill in the gap with uncharitable inferences about why they do what they do.
In other words, unfamiliarity leads to myopia, which leads to righteous certainty.[1] That is politics in the Internet age, and it is eroding norms of objectivity- and truth-seeking in journalism and academia.
What We Know About Electric Utilities
For as long as there has been public utility law, policy makers and scholars have recognized the Averch-Johnson effect — the idea that traditional rate regulation incentivizes utilities to over-invest in capital equipment. And so the law charges regulators with a watchdog function, one they execute imperfectly because of information asymmetries between utilities and the public. When utilities take advantage of those asymmetries, ratepayers pay more. When regulators over-correct, shortages of electricity generation drive wholesale power price increases, and ratepayers (once again) pay more. See the problem?
One of the reasons why policymakers introduced competition and market pricing into parts of the electricity market a few decades ago was to try to eliminate these perverse incentives. Yet whatever efficiency benefits competition has brought, it is not clear that the average residential consumer has captured any of them. And the economic thinking that drove those changes has also de-emphasized broader public interest concerns that used to loom larger in public utility regulation.
So choose your imperfect system, more regulation or less regulation.
Scholars and policy wonks continue to debate fixes to these problems, and within legal scholarship that debate has flourished recently. One strain of that work builds on a 2014 analysis by UCLA’s William Boyd that urged state public utility regulators to recapture a broader notion of the public interest that includes environmental and social policy goals.[2] Others urge better-structured competitive markets.[3] Still others focus on markets as the problem, and/or urge government provision of electricity service.[4]
What we think we know, but don’t
These are the dimensions of a healthy policy debate, and this new literature is chock-full of interesting ideas about positive structural changes in energy regulation. Unfortunately, some of that same work also strays into moralizing judgments and hasty inferences about the motives and behavior of electric utilities. Specifically, some scholars attribute to utilities (as a class) corrupt control of the levers of policymaking power, dogmatic opposition to the energy transition, and contempt for their customers. The empirical support for these propositions falls far short of the usual scholarly standards, but that doesn’t seem to have affected their popularity.
Have corrupt utilities “captured” policymaking? I have used this space many times before to explain why writers and scholars are too quick to infer corruption and capture of the policymaking process by utilities. The transparent corruption in the relationship between “tech bros” and the Trump Administration feeds this view, as do recycled anecdotes about utility corruption in state policymaking. But more rigorous empirical research contradicts this generalization: see e.g., here, here, and the academic literature review on pp. 71-74 of Climate of Contempt. No need to repeat those arguments again; writers either respect those analyses enough to engage them, or they don’t. (Frankly, they mostly don’t, which is disappointing.)
Do utilities oppose the energy transition? Several social scientists,[5] legal scholars,[6] and writers[7] have suggested as much. And some suggest that the longstanding idea that there are tradeoffs between an mostly-renewables grid and a reliable electric grid is a red herring. But this is not quite right either.
The engineers who run electric utilities are problem solvers. Their complex task is to keep the lights on — to keep supply and demand in balance, even though both fluctuate constantly, moment by moment. These people do this job within techno-economic and policy constraints that differ over time and space. If policymakers in one state want to integrate large amounts of weather-dependent renewable energy into the grid, grid engineers will find ways to keep the lights on within that additional constraint. Indeed, the experiences of grid operators in Texas, California and several other regions confirm that it is possible to reconcile a reliable grid with a much cleaner grid. (And in many places, adding renewables also brings down spot prices, though the out of pocket costs of a net zero carbon emissions grid remain a subject of debate).
If, on the other hand, policymakers in a different state prefer to retain their traditional, less weather dependent generation mix, then that simplifies the task of keeping the lights on by offering one less constraint within which grid operators must accomplish that task. This seems like a straightforward point. So it is misleading to suggest — as an award winning article by eminent energy transition scholars does — that integrating weather-dependent renewables makes for a more reliable grid, all else equal.[8] That just isn’t so.
Nor is it accurate to say that “utilities” (as a class) oppose the energy transition, or that their decarbonization plans simply “greenwash [their] ongoing efforts to build more, corrupt more, and pollute more”?[9] That statement ignores (i) the efforts of many of the nation’s largest electric utilities to build a greener electricity generation mix, efforts touted by the Biden EPA in its proposed power plant rule in 2023.[10] Writer Katherine Blunt dove deeply into one of those companies’ efforts in her account of Pacific Gas & Electric’s second bankruptcy, crediting PG&E’s catastrophic neglect of wildfire safety in part to its hyper-focus on decarbonizing its electricity supply.[11]
The point is not that utilities never obstruct the energy transition; it is that judgy generalizations about entire groups of energy policy actors — utilities included — are almost always wrong. And they feed the negative partisanship that hampers energy transition progress.
Like most businesses, utilities try to maintain their economic, legal and social licenses to operate. The external forces that define those licenses are in constant flux. When policymakers do not push utilities to build or integrate more clean energy, some don’t do it. When regional grid managers propose transmission investments or rules changes that would devalue an individual utility’s assets, the utility often opposes those proposals. That opposition sometimes undermines the pursuit of changes that have positive net social benefits, suggesting the need for policymakers to intervene. But it does not justify ascribing to utilities the panoply of human vices we see in climate policy commentary.
It ought to go without saying, but doesn’t, that utilities are not a monolith on this issue.
Do utilities have contempt for their customers? To writers and scholars, customers can be an abstraction. To utilities they are a heterogeneous population of people and businesses whose electricity needs they serve and whose frustrations they face when that service is inadequate or too expensive. It is a leap of logic to infer disregard for those customers merely from company or policymaker decisions that scholars or activists oppose.
Consider a traditionally regulated electric utility that owns a coal-fired power plant. The plant jeopardizes the health of some of those who breathe its emissions. By law, the utility’s rates reflect the positive return it earns on investment that plant. It could provide the same amount of power less expensively by replacing that plant with renewable energy; but because it is entitled to that return on investment in the coal-fired plant, doing so would only add costs and raise rates for customers. In a dispute over whether to close the old plant, both the utility and advocates of the plant’s closure have an argument that they are protecting the public — one from elevated rates and the other from deadly pollution.[12]
More generally, when utilities focus on reliability and affordability over climate impacts, they are probably reflecting the priorities of the average customer. So it hardly follows that utilities regard customers with contempt. But that idea resonates because we have no choice but to deal with the utility monopoly. Comedian Lily Tomlin’s 1960s and 70s portrayal of “Ernestine,” a telephone operator for the then-monopoly AT&T illustrated this idea with the tag line, “We’re the phone company. We don’t care. We don’t have to.”
Tomlin is a performing artist tapping into popular emotions in order to entertain us; she has no duty to tell us the whole truth about the subject of her parodies. Yet her caricature is mirrored in portrayals of utilities by those who do have a duty to tell the whole truth.
For example, Joel Eisen & Heather Payne’s otherwise excellent article, “Utilities with Purpose,” includes statements that utilities try “to harm their customers,” and use their reliability obligations “as a fig leaf that covers for their anti-consumer actions.” They say that “[n]o utility is required to have any mission other than seeking the highest profits, as no state’s utility law specifies otherwise.”[13] While I share Eisen and Payne’s frustration with the slow pace of the energy transition, it stretches credulity to suggest that most utility executives — people who choose to work in the energy supply business — actively try to do harm to their customers. And I think that Eisen and Payne also mischaracterize state public utility law, which in many states specifies a variety of environmental, safety and social obligations beyond maximizing shareholder returns.
Advocates sometimes find it difficult to acknowledge that a reasonable (and ethical) utility decision-maker, one who understands climate science, may nevertheless choose to prioritize reliability or affordability over climate impacts. So they impute immorality to those decision-makers. But scholars and journalists ought to recognize that possibility, even if they believe that those who do not prioritize the clean energy transition are making a mistake.
Conclusion
Many people on the progressive left who are frustrated with the slow pace of the energy transition hold these jaundiced views of utilities in their minds eye, in part because online social bubbles hide from parts of the truth and in part because it is human nature to generalize based on what we see. That combination is dangerous to our understanding.
And it doesn’t help that the trained journalists who once tried to educate readers, listeners and watchers — and who tried to give us the complete picture of complex problems — have been sidelined in today’s hyper-competitive, hyper-fast news market.
Proponents of “energy abundance” claim that the popularity of their agenda is in part a response to progressive energy and climate priorities. I don’t know if that is correct as an empirical matter, but it may be. Certainly, energy affordability and energy reliability loom larger to most voters than climate change. But regardless, I hope that those of us who support stronger climate policy can find ways to be more coldly analytical — i.e., to be more curious and less judgmental — about utilities and about energy transition politics. If the prize is a stabilizing and then reducing atmospheric carbon levels, focusing on who we hate takes our eyes off of the prize. — David Spence
NEXT POST: Oil companies!
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[1] On this question, see the work of Penn political scientist Diana Mutz, especially her book Hearing the Other Side (2006).
[2] Boyd’s 2014 article is here. More recent legal scholarship expanding on this idea comes from (click on author) Alison Gocke, Boyd & Carlson, Klass & Wiseman, Eisen & Payne (see here and here), Heather Payne, Kristen van de Biezenbos, Jodi Short, and Klass & Chan (here and here), among others.
[3] See e.g., articles by Joshua Macey and various co-authors (here, here, here, and here), and Lynne Kiesling’s book, Deregulation, Innovation and Market Liberalization (2009) and substack, “Knowledge Problem.”
[4] See e.g., Boyd, “Decommodifying Electricity” (2024) and “Ways of Price Making” (2020) for a deep critique of competitive electricity markets. On socializing electric utility costs among taxpayers, see Shelley Welton, “Public Energy” (2017), Klass & Wilton, “Local Power” (2022), and van de Biezenbos, “Climate Proof Electricity” (2025)(arguing for socialized wildfire costs).
[5] Political scientist Leah Stokes portrays energy transition politics as a “knife fight” between the public and utilities. See e.g. here, and here. See also Steffen, Karplus & Schmidt, “State ownership and technology adoption” (2022), Carley and Konisky’s book, Power Lines (2025), does not indict utilities so much as it charges the policymaking system with neglecting the interests of the politically powerless.
[6] Eisen and Payne, “Utilities With Purpose” (2024) and “Rebuilding Grid Governance” (2022).
[7] Progressive writer Kate Aronoff has articulated the case against investor-owned utilities in her work (see here and here). Grant Smith, writing in Utility Dive, charged utilities with using “raw political power, augmented from time to time by criminal enterprise, to delay [the energy] transition.” A similar tone is struck by Genevieve Guenther in her 2024 book, The Language of Climate Politics.
[8] In “Grid Reliability Through Clean Energy,” Klass et al. dismiss the “perceived tension” between integrating renewables into the grid and ensuring reliability as “a political talking point” (p. 976), an illusory product of a “siloed” approach to energy law. Their argument that a high-renewables grid is a more reliable grid is based on the assumption that adding renewables brings added investment in transmission and energy storage. Of course, those system additions improve reliability regardless of the generation mix. Their larger point, I think, is that a net zero grid can be a reliable grid, a proposition with which I agree. Other places where authors dismiss tension between reliability and a net zero grid include (a) Eisen & Payne, Rethinking Grid Governance p. 29 (“reliability is a fig leaf that covers for the utility’s anti-consumer actions”), and (b) Ari Peskoe’s 2019 podcast with congressman Phil Sharp in which Sharp calls reliability concerns “the last refuge of scoundrels.”
[9] Eisen & Payne, Rebuilding Grid Governance, p. 20. One look at the way third party certifying organizations score utilities’ environmental performance illustrates the inaccuracy of that generalization. See for example the utility environmental and social governance (ESG) ratings from rating agencies like Sustainalytics (https://www.sustainalytics.com/esg-data) or MSCI (https://www.msci.com/data-and-analytics/sustainability-solutions/esg-ratings).
[10] Federal Register, v. 88, pp. 33262-33262.
[11] Katherine Blunt, California Burning (2022).
[12] In the long run, replacing the coal-fired plant with cheaper renewables is a win-win proposition; in the short run, some states have softened the rate impacts of doing so by securitizing the utility’s costs of closing the plant: i.e., issuing bonds to reimburse the utility and paying off the bond debt over decades through a small rate charge.
[13] Eisen & Payne, Utilities with Purpose, pp. 994-95, 1028, and 1045.
