Utilities Lard Entitlements on Customers

The Wall Street Journal looked at reports from 1500 of the largest companies in the US. One of the things they found is that cumulatively these companies were paying over $600 million for perks for executives and board directors. Some of it was for security in the wake of the United Healthcare executive’s killing in New York City that might be called for, but a bunch was for relocation, personal aircraft, health and welfare, and ferrying them around in limos and hired cars. Apple’s Tim Cook logged in $790,000 in personal flights. He must live in the air. 

Even as we raise our eyebrows, at least they are trimming their own shareholders, as long as they can get away with it. Then there are utility companies that are regulated by state and federal bodies, because their returns are guaranteed and even when investor-owned, many of their expenses are passed onto consumers in the rate base. This has become especially contentious as many tech and other companies developing data centers are being scrutinized from city halls to the White House over how much we “biscuit cookers,” as the late head of Arkla Gas Witt Stephens called us, will absorb of their costs.

A recent report in the Illuminator on how various utility companies have fleeced their ratepayers would have been shocking, if we hadn’t suspected as much already. For utility execs, as they flatly summarize, it’s a bit of “monkey see, monkey do”:

"Power companies across the country have been quietly trying to charge their customers for millions of dollars’ worth of luxury expenses — including bi-weekly massages, access to exclusive country clubs and private jet travel — according to a new report from the Energy and Policy Institute (EPI), a utility watchdog. The regulated monopolies are only supposed to charge for expenses that directly benefit customers, such as upgrades to the electric grid or the salaries of employees. But a dysfunctional regulatory system allows gas and electric companies to charge not just luxury perks, but also nonessential lobbying and advertising costs into customers’ electric bills, the report found."

It’s kind of outrageous reading, especially when there are situations where gas companies have billed their customers for their politicking and advertising efforts to block electricity companies so that cities don’t buy something other than gas-powered busses. Talk about robbing Peter to pay Paul with us losing on both sides of a bad deal.

Some states have taken steps to get such perks and politics out of the rate base, including Colorado, Maine, Massachusetts, and Vermont. Nine states from New York to Minnesota to California have proposed legislation to deal with these abuses. Louisiana’s elected Public Service Commission, to their credit, is reviewing some proposed regulatory steps to curb these practices. It’s only common sense to block the companies from making contributions in political races for elected commissioners. Talk about working the refs or should we say bribing the cops?

This is a situation that is broken and with rising rates need to be fixed. Fourteen states out of more than 50 willing to take on their utilities is pretty lame, when there needs to be some butt kicking all across the country.