A new Guardian investigative report shows how American utilities have pushed money into the country’s legislature through shady nonprofits to buy influence. The article is definitely worth a read, but I’ve tried to summarize the most important pieces in a few paragraphs for those of you with limited time:
According to a recent analysis of 25 for-profit utilities, US power companies have donated at least $215 million to dark money groups in recent years. These donations, made to barely regulated nonprofit organizations, have allowed utilities to influence electricity prices, hinder solar projects, and support sympathetic legislators. While such donations are legal, several power companies have faced criticism for their use of dark money, including cases where the funds were used for illegal purposes, such as bribery. The lack of transparency around these donations and the secretive nature of the recipient groups make it difficult to track the full extent of dark money spending by power companies.
One example of dark money influencing regulatory outcomes occurred in Arizona, where a power company donated $10.7 million to dark money groups that supported favorable regulatory commission races. The commissioners backed by these groups later approved a $95 million annual increase in electric bills, which was passed on to customers. The secretive nature of these donations allows utilities to shape the transition to green energy on their own terms and obstruct oversight. Critics argue that dark money spending is not in the public interest, particularly when it goes against clean energy and climate goals that customers support.
The use of dark money by power companies extends beyond individual states. Florida Power and Light (FPL), for instance, employed dark money to interfere with ballot initiatives and influence the elections of politicians who aimed to address high electric bills and environmental concerns. Dark money allows companies to fund political attack ads, discrediting campaigns, and even private investigations against their critics. The lack of accountability and regulation surrounding dark money spending by power companies has raised concerns among advocacy groups, leading to calls for federal investigations into the issue.
However, enforcing regulations and uncovering dark money networks remains a challenge. Nonprofit organizations that receive these donations often have generic or patriotic-sounding names, disclose little information about their funding sources, and transfer large sums of money among themselves. The Internal Revenue Service (IRS), responsible for overseeing tax-exempt groups, has limited resources and has not revoked the status of any nonprofit for violating political spending rules in recent years. The current tax code prioritizes individual privacy, hindering efforts to address the political consequences of dark money spending.
I won’t deny that the utility actions revealed by this report are unsavory. However, I find myself asking if the fault really lies with the corporations, or if we should instead focus on the current regulatory framework and tax code that allow for the existence of dark money and provide limited oversight to begin with. Power utilities, like any other businesses, have the right to participate in the political process and support causes or candidates they believe align with their interests. However, it is the lack of transparency and accountability in the system that enables the misuse of dark money and obscures the true extent of its impact.
Power companies, as for-profit entities, have a duty to their shareholders to protect their interests and ensure their long-term viability. Money is their oxygen, and they will chase it however allowed. Engaging in political activities, including making donations, is a common practice for businesses across various sectors. While the scale of dark money contributions by power utilities may be significant, it is important to remember that they are operating within legal boundaries. If the laws and regulations surrounding dark money were more robust and transparent, it would provide clearer guidelines and ensure greater accountability.
The IRS would ideally play a crucial role in overseeing nonprofit organizations and enforcing compliance. However, the IRS has been facing resource constraints and political challenges, which hinder its ability to effectively regulate dark money spending. It is imperative that lawmakers and regulators work towards comprehensive reforms that enhance transparency, strengthen disclosure requirements, and ensure that dark money is not used for illicit purposes. By addressing the systemic flaws and strengthening the regulatory framework, the issue of dark money can be better addressed, holding all actors accountable, including power utilities.
As tempting as it is to moralize, people and corporations generally follow the incentives. I should rely on public transportation more, but the buses in my city are so hot in the summer that they leave you drenched in sweat after a short ride. So instead I drive or take a taxi. Utilities shouldn’t buy political favors. But our current system makes it almost inevitable by doing very little to discourage it.