How Much Are You Paying For Utility Profits? — Episode 270

The episode centers on Paying For Their Profits, a report from the Energy and Policy Institute, with Research & Communications Director Daniel Tait joining John Farrell to explain how much of consumers' electric bills flow to shareholders and why. Tait traces his interest to long outages after 2011 tornadoes in Alabama and then moves to the report's core findings: from 2021–2024 the median investor‑owned utility retained roughly 13% of revenue as net income, and preliminary 2025 data indicate that share rose to about 15%. He and Farrell note outliers in the Southeast—Florida Power & Light and Georgia Power—where profit shares can reach roughly 20–30% of the bill. EPI published an interactive tracker based on publicly available FERC and SEC filings so customers can look up their own utility.

Tait clarifies methodology and limits: the calculation is net income divided by total revenue drawn from FERC Form 1 and earnings reports, but it misses profits embedded in restructured markets from third‑party generators or retail suppliers, so numbers are likely conservative for many customers. The conversation distinguishes profit margins from regulators' return on equity (ROE): regulators set ROE (commonly around 10%), but ROE compounds across repeated capital expenditures (the "mortgage" analogy), so a seemingly small ROE change can mean hundreds of millions of dollars for a large utility. Causes for high profits, Tait argues, include heavy utility lobbying, the technical and resource‑intensive nature of rate cases (utilities can hire consultants and often pass those costs to customers), and weak funding for intervenors. Farrell adds a practical contrast: his Xcel example showed about 15% of the bill to profit, while an ILSR ROE‑based calculator estimated roughly $150/year of excess charges for his household.

On remedies, the episode surveys options rather than prescribing one solution: lower or better‑justify ROE; limit what earns a regulated return; bolster consumer advocate resources and transparency; and adopt performance‑based ratemaking. Tait points to model legislation (American Economic Liberties Project) and active efforts in several states including New York. The pair underscore urgency: as utilities undertake multidecade capital builds, getting ROE and revenue allocation right now will determine whether customers are saddled with decades of excess profit extraction or see meaningful relief and better‑prioritized investments.