June 26, 2022

Volume XII, Number 177

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June 24, 2022

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Federal Trade Commission Petitioned To Investigate Electric Utilities

On May 18, a coalition of 235 consumer, environmental, and public interest groups penned a petition urging the Federal Trade Commission (“FTC”) to investigate alleged anticompetitive business practices undertaken by electric utilities, pursuant to Article 6(b) of the FTC Act, which empowers the agency to conduct a broad investigative study and request information. Sec. 6(b), 15 U.S.C. § 46(b).

The 42-page petition asks the FTC to investigate how certain unfair competition and deceptive acts allegedly undertaken by electric utilities are purportedly harming both renewable energy companies competitions with those utilities and consumers. 

According to the petition, electric utilities engage in unfair competitive acts to protect market monopolies and to obstruct deployment of affordable, renewable energy. For example, the coalition asserts that electric utilities actively block transmission development that would help enable competition and engage in lobbying efforts and political activity that undermine competition. They also impose unfair fees on rooftop solar energy producers in an effort to discourage customers from adopting solar energy, according to the petition. The utilities are said to purposefully use their authority over distribution grids to deny or delay distributed energy deployment, ultimately increasing costs. The coalition also alleges that unfair mergers between electric utilities raise prices and lead to fewer renewable energy options, citing a pattern of rate increases following successful mergers.

The petition also claims that electric utilities engage in unfair and deceptive acts that harm consumers by driving up their electricity bills. For example, the petition alleges that utilities engage in bribery, fraud, and voting interference to get pro-utility legislation passed and financially support or provide political favors to elected officials who represent utility interests. The petition includes a number of examples of utilities allegedly bribing members of state legislatures or engaging consultants to facilitate schemes to siphon votes away from candidates who would otherwise hold utility companies accountable.

The coalition urges the FTC to “safeguard democracy from undue corporate influence” by using its power under the FTC Act to conduct an Article 6(b) study of the electric utility industry. Section 6(b) gives the FTC broad subpoena power to request information from people, partnerships, and corporations (except for banks, savings and loan institutions). The FTC has used this power to study the practices of specific industries using information requests to selected companies in that industry. The coalition lists proposed outcomes of the investigation in its letter, including:

  • Recommendations for federal and state enforcement actions against electric utilities that have committed abuses;

  • Proposed legislative and regulatory reform to address and prevent utility abuses that lead to consumer and competitor harms;

  • Proposed reform to state action immunity defenses in antitrust law; and

  • Recommendations that the FTC address governance and procedures for RTOs and ISOs.

Takeaways: An FTC 6(b) investigation could have broad impacts on the electric utility industry. The FTC has conducted this type of investigation in the sector—for example, a 1935 investigation laid the groundwork for the passage of the Public Utility Holding Company Act of 1935. Further, in addition to imposing potentially substantial burdens on the subjects of the potential FTC investigation, such a wide-ranging investigation may lead to FTC enforcement actions – the FTC now has a Democratic majority in place with the recent confirmation of Commissioner Alvaro Bedoya – or even legislative or regulatory reform. 

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 144
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About this Author

John D. Carroll Antitrust Lawyer Sheppard Mullin
Partner

John D. Carroll is a partner in the Antitrust & Competition Practice Group in the Washington, D.C. office.

Areas of Practice

John’s practice focuses on civil and criminal antitrust matters, including mergers & acquisitions, strategic counseling and compliance, and global cartel investigations, where he represents clients before the Department of Justice Antitrust Division, Federal Trade Commission, and international and state antitrust enforcement authorities.

Prior to private practice, John was in the Mergers I Division of the Federal Trade...

1.202.747.1951
Joseph Antel Associate Washington Sheppard, Mullin, Richter & Hampton LLP
Associate

Joe Antel is an associate in the Washington, D.C. office, focused on antitrust and competition law.

Areas of Practice

Joe represents clients in antitrust and competition matters involving merger reviews, civil and criminal government investigations, and antitrust litigation. He has represented parties in a variety of industries, including technology, aerospace, consumer goods, waste management, manufacturing, retail, health care, pharmaceuticals, and oil and gas.

Before joining Sheppard Mullin...

202-747-2654
Katie Daw Government Investigations Attorney Sheppard Mullin Law Firm
Associate

Katie’s practice focuses on government investigations into antitrust and competition issues and antitrust litigation.

Prior to joining the firm, Katie completed internships with United States Senator Dianne Feinstein and with United Kingdom Member of Parliament Graham Allen, for whom she conducted nutritional poverty research and drafted initiatives. She also served as a law clerk for the Baltimore Police Department, where she focused on compliance with the city’s consent decree entered into with the Department of Justice.  

202-747-2191
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