Uniquely captured regulators? Investor-owned utilities and business power over American electricity policy

• In Event: Democratic Institutions and the Law (Co-sponsored by Sociology of Law Section)

Abstract

Investor-owned electric utilities (IOUs) occupy a unique and essential space within the American political economy. They are for-profit, monopoly corporations that provide a public service so essential – electric power – that one might be surprised to learn that they are even privatized in the first place. Tellingly, the collection of state and federal laws that govern their operations are known as the “public utility code,” and yet, they are privately-owned. The privileged position of this industry gives them an unusual form of political power. In this paper, we first theorize four features that in combination might maximize an industry’s regulators’ susceptibility to regulatory capture. We then apply these features, all of which characterize IOUs, to an empirical analysis of a quarter century of utility sector restructuring and renewable electricity policies in seven U.S. states, together housing one third of the U.S. population. We show how IOUs leveraged all four features in combination to protect shareholder interests and redistribute costs and risks to competing political actors. Finally, we examine other industries, such as tech, insurance, and finance, which possess some but not all of these four features and show that, while they enable substantial political power as well, that power is less unchecked. Our findings have implications for both American electricity policy and for the study of corporate political power more generally.

Authors

• Joshua A. Basseches, Case Western Reserve University

• Anthony S. Chen, Northwestern University