a conspiracy of evil nerds

February 21, 2025 9:20 AM

'What if I were to tell you about an obscure clique of consultants that concoct dubious economic analysis to convince regulators to side with corporations, enabling a massive rip-off of ordinary Americans? I think your curious, cautious response might be, “You’re going to have to be more specific.” OK, so this obscure clique has a name. They’re called the Society of Utility and Regulatory Financial Analysts, or SURFA. And they are a large part of the reason why you’re paying way too much for electricity.' The Secret Society Raising Your Electricity Bills.
posted by mittens (23 comments total)

'What if I were to tell you about an obscure clique of consultants that concoct dubious economic analysis to convince regulators to side with corporations, enabling a massive rip-off of ordinary Americans? I think your curious, cautious response might be, “You’re going to have to be more specific.”

Nah, you wouldn't need to convince me, I figure this is probably always happening.
posted by star gentle uterus at 9:25 AM on February 21 [18 favorites]

OMG. I work in the broader energy/utilities space and have a terrible time explaining this to people. At first glance this looks like a great article….
posted by CostcoCultist at 9:42 AM on February 21 [3 favorites]

If you told me this was happening in the UK I wouldn't believe you, because it would be too complex. I'm pretty sure the energy companies just decided to raise bills and their Eton chums in government just let it happen.
posted by HypotheticalWoman at 9:58 AM on February 21 [2 favorites]

A modern-day Phoebus Cartel. Someone get Thomas Pynchon on the phone.
posted by stannate at 10:00 AM on February 21 [9 favorites]

I STILL don't understand why utilities aren't provided by the state, along with health care, roads, fire-fighting, and education.

JFC, it's right there in "promote the general welfare"!!
posted by wenestvedt at 10:09 AM on February 21 [18 favorites]

Because private companies do it che… haha, I couldn’t finish. Because we live in a hellscape is the actual answer.
posted by OnTheLastCastle at 10:29 AM on February 21 [25 favorites]

>I STILL don't understand why utilities aren't provided by the state, along with health care, roads, fire-fighting, and education.

In the USA, they have some private fire-fighting, private health-care, some private roads (the interstates are not private as they are where a world-war military project). Education is being privatized in increasing amounts.

In general, a private service can bribe politicians. A public service cannot. So private services are more efficient at moving money into pockets of politicians and at funding politician campaigns.
posted by NotAYakk at 10:36 AM on February 21 [18 favorites]

Thank you. The article has been sent on to my state rep and senator. My local electric company just asked for 10% increase in rates
posted by dark matter at 11:02 AM on February 21 [1 favorite]

I STILL don't understand why utilities aren't provided by the state, along with health care, roads, fire-fighting, and education.

In Connecticut some municipalities provide electricity. Wallingford, for example.
posted by ZenMasterThis at 11:18 AM on February 21 [6 favorites]

I've worked for regulated investor-owned utilities for nearly two decades, and have been a witness in rate cases as well as other proceedings. I've never heard of SURFA before this FPP. That doesn't mean the arguments made by Ellis are wrong (I haven't looked carefully at his paper), but the idea that rate of return should equal cost of capital is not exactly novel; most public utilities commissioners would likely tell you that's their goal.
posted by nickmark at 11:29 AM on February 21 [1 favorite]

I'm sure this is unrelated - in CA, PG&E reported profits of $2.47 billion for 2024, raised rates 6 times last year, and California Public Utilities Commission (CPUC) got grilled by state senators yesterday.
posted by toastyk at 12:00 PM on February 21 [6 favorites]

I remember the public outrage at what Enron did. Investor-owned utilities learned a lot from Enron. Mostly, how to get away with stuff and not to get caught.

The somewhat sleepy Canadian utility i worked for almost 20 years ago now has operations all over North America. They seem to have rather large ops in Texas. It doesn't seem like the same company
posted by scruss at 1:31 PM on February 21 [6 favorites]

I'm sure this is unrelated - in CA, PG&E reported profits of $2.47 billion for 2024, raised rates 6 times last year, and California Public Utilities Commission (CPUC) got grilled by state senators yesterday.

All of the commissioners on the CPUC were appointed by Democratic Party darling Gavin Newsom and were confirmed by the overwhelmingly Democratic state senate.
posted by flamk at 1:46 PM on February 21 [5 favorites]

In 1937, the Federal Theater Project's "Living Newspaper" series did a play about the power companies and how they had formed a monopoly, and how this was screwing us over.

In 2009, a theater company I've worked with did its own staging nearly 80 years after that initial production. People in the audience felt it was just as relevant today as it was in the 1930s.
posted by EmpressCallipygos at 3:35 PM on February 21 [5 favorites]

Surely this is the free market at work? And if not, surely DOGE will come to the rescue of ordinary hard working Americans and save us from this corruption!
posted by nikoniko at 4:04 PM on February 21 [2 favorites]

People think that corruption is when someone pays a bribe to get a government contract. That’s for amateurs. It’s much more lucrative to use the state to protect a monopoly you control.
posted by RandlePatrickMcMurphy at 5:43 PM on February 21 [5 favorites]

>commissioners on the CPUC

PG&E gets a 10% profit margin, which it has enjoyed since 1900 or whatever. I haven't seen a good breakdown (i.e. to the penny of its current 44c kwh cost), but "profit" is only ~5c that.
posted by torokunai2 at 7:30 PM on February 21

>I STILL don't understand why utilities aren't provided by the state

SF has been trying to buy PG&E out since 1913. The last city-owned utility to break free was SMUD, back in 1946, after a 23-year fight.

This is PG&E's state, we just live in it
posted by torokunai2 at 7:36 PM on February 21 [5 favorites]

Utilities are a natural monopoly with often high capital costs. You can’t really get the direct benefits of competitive market for price setting. Any way of choosing determining what customers pay risks on the one hand, charging too much and on the other not allowing for sufficient investment in essential services. This includes direct taxation. In addition you want economic incentives for customers to use less, to protect the environment. Any complicated system is a potential opportunity for people to exploit.
posted by plonkee at 4:27 AM on February 22

Matt Stoller wrote about power companies a couple of weeks ago, covering some of the same ground. It makes a great companion piece and broadens the scope a bit. Sadly, this all started with…Jimmy Carter. (On edit: ah ha, the original article is by Stoller’s Organized Money cohost!)
posted by rednikki at 6:53 AM on February 22

In Canada at least, many IOUs have both a regulated (rate-based) distribution business and a commercial (profit-based, entrepreneurial) generation subsidiary. There is supposed to be a total firewall between the two, because if the generation side is able to talk to the distribution side they might (okay, *will*) collude on pricing. This may be done through selective availability of commercial generation assets, a little trick people picked up from Enron.

It is frequently an open secret to industry people that the firewall is completely porous unless the regulator is asking about it. I'm sure many USA-based IOUs do the same. Heck, a lot of them are subsidiaries of Canadian utilities.
posted by scruss at 7:37 AM on February 22 [1 favorite]

Mod note: Thank for you posting this informative link, we've added it to the sidebar and Best Of blog!
posted by Brandon Blatcher (staff) at 6:34 AM on February 23

In general, a private service can bribe politicians. A public service cannot. So private services are more efficient at moving money into pockets of politicians and at funding politician campaigns.

Public services absolutely can bribe politicians via endorsements and their unions and they do! (Chicago resident here). Corruption and power politics finds a way.
posted by srboisvert at 3:26 PM on February 23