Dec 15, 2025
On December 15, The Capitol Forum held a conference call with Daniel Hanley, Katherine Wyszkowski and Michael Murray to discuss a forthcoming report analyzing the antitrust risk posed by U.S. electric utilities. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Welcome. I’m Teddy Downey, Executive Editor at The Capitol Forum. And thank you for joining us for today’s discussion. I’m pleased to host Daniel Hanley, Katherine Wyszkowski, and Michael Murray for a conversation examining the antitrust risks facing U.S. electric utilities, particularly as they relate to control over consumer energy usage, usage data, potential exclusionary conduct, and the broader implications for competition, consumers, and market transparency.
In particular, we’re going to focus on a recently published report titled “Fair and Open Markets for Virtual Power Plants,” authored by today’s guest in collaboration with Sandeep Vaheesan of the Open Markets Institute. The report analyzes how utility control over data and grid access can raise antitrust concerns and impede competition from emerging energy technology providers.
It’s an incredible paper. To my mind, I’ve never seen anything like this done in the electric utility space.
I think a lot of people, certainly our listeners, are more familiar with looking at all the myriad kinds of anticompetitive conduct by Big Tech. And here we have your more classic monopolies, the electric utility monopolies, engaged in a lot of the same kind of conduct, which is really fascinating to me. And so, please go read the paper. It’s excellent.
And in terms of the guests here today, Daniel Hanley is a Senior Legal Analyst at the Open Markets Institute, where he researches the intersection of technology and antitrust law with a focus on legal remedies and political economy.
Michael Murray is President of Mission Data, a national coalition supporting consumer access to energy usage and cost data and fostering competition among energy technology firms.
And Katherine Wyszkowski is a State Policy Manager at the Mission Data Coalition, where she leads regulatory engagement across the country to advance policies that strengthen utility customers’ ability to access and use their own energy data.
Daniel, Katherine, Michael, thank you so much for doing this today.
MICHAEL MURRAY: Thank you, Teddy.
KATHERINE WYSZKOWSKI: Yeah, thank you so much for having us.
DANIEL HANLEY: Thanks.
TEDDY DOWNEY: And Michael, why don’t you kick us off here? I think the paper goes into a lot of virtual power plants. If you could kick off, explain what that is, why that’s important. I know for a layperson, it would just be good to define that and talk about some of the highlights from the report. And then, hopefully we can hear from Katherine and Daniel after that.
MICHAEL MURRAY: You bet. So, for those of you who are maybe familiar with competition issues but not the power grid specifically, I’ll just lay out a couple of concepts that will be helpful here. Competition arises in these moments of peak demand throughout the electricity system.
So, we have a very constrained by capacity type of system. You all may have experienced going to the airport when a flight’s overbooked and there’s an offer of payment to like, hey, don’t take this flight. We’ll pay you $300 or whatever to avoid this flight. Because the incremental cost of adding another plane and pilots and staff and everything else at that peak moment is really high.
And there’s the same sort of concept that works in the electric system. There was one estimate that, with the California electricity crisis in 2001, that nearly a 5 percent reduction in demand at that key point could have cut the costs of power by like 50 percent during that crisis. That’s what sent one of the state’s largest utilities into bankruptcy.
And so, using a higher utilization rate of the power grid as a whole is in everybody’s interests. That would help put downward pressure on rates. We all want that type of outcome. But unfortunately, there are these very small number of hours per year when the system is completely maxed out, demand is going through the roof, and your choices are (1) uncontrolled blackouts, or (2) a much more controlled and elegant type of shedding of that load or shedding of demand.
And that’s essentially what virtual power plants are. And so, it turns out that a lot of those uses of electricity at those really key times are actually, optional. They’re discretionary. You have a lot of flexibility in when to use them. And the problem, at a high-level, is that investor-owned utilities have a financial incentive to overbuild the infrastructure. That’s how they get paid. And so, they don’t have a financial incentive to utilize the power grid to the greatest extent possible. They’d really much rather build more and more transmission lines, distribution lines, and generation plants for those peak hours. And if those peak hours were to just keep getting worse and worse year after year, which is frankly what we’re seeing right now, they continue to get paid to do that.
And so, the other thing about this, there’s a FERC report, the Federal Energy Regulatory Commission report, that talked about the national potential for virtual power plants. They use the term demand response. They’re very similar terms. And FERC found that only six and a half percent of this virtual power plant potential was actually utilized.
So, we’re sitting in this moment where we’re going to face the highest increases in electric bills in our lifetimes. And only six and a half percent of these cost-effective solutions to minimize the infrastructure spending and the marginal generation costs during those peak times is being taken advantage of.
So, you have to ask the question why. And there’s several reasons why, but the one that we’re going to talk about today is about access to data on individual homes and businesses’ energy usage. So, in the past we had an old analog meter, an electric meter, that was really from the late 1800s, that has gone through a few modifications, but the technology is largely the same. And someone would come by to your house and read the meter, say, once a month.
And then beginning in the late 2000s, and accelerated with the American Recovery and Reinvestment Act, we saw millions and millions of digital meters or advanced meters get deployed nationwide. And these would track energy usage at 15 minute intervals or sometimes 30 minutes or 60 minute intervals. And so, this would finally give homeowners, residents, businesses, the proof of the hour-by-hour energy they were consuming in a way that before you only had a single reading a month. So, you just didn’t have that granularity of information.
And so, how this meter data gets used in virtual power plants is that if there was a virtual power plant in California in 2021 during a severe heat wave across the west and there was some 200,000 homes who were part of this virtual power plant—and for an hour or maybe two hours every home would conserve their usage. And they would get paid through the wholesale power markets a share of their contribution.
So, the average person contributed something like only 700 watts. But when you aggregate it across a large enough number of homes, that becomes really meaningful and that becomes a cost-effective alternative to that marginal transmission line, the marginal generation, which is extremely expensive.
But the way that you demonstrate that savings is through the smart meter data. And so, if your usage at home was say 3,000 watts and then you received a text message, hey, I can reduce my usage now and you brought that down to 2,000 watts. Okay, there’s 1,000 watts there that is a service that is being provided back to the power grid during these peak times.
And so, when we started looking at this issue, we noticed that utilities were investing huge amounts of money in these smart meters and so nationwide roughly 80 percent market penetration of smart meters. So, 80 percent of homes and businesses nationwide have them. And yet, it’s still extremely difficult for a competitive virtual power plant provider to get access to that information so that they can get paid for their reductions.
And so, we tracked this nationwide. Roughly there’s 27 million or so electric meters covered by policies in which right now consumers can share their energy usage data. It’ll exceed 40 million soon as some systems come online in various states. But that’s out of let’s say 140-ish million smart meters that are deployed.
So, we’re still talking about a very low percentage. And really, the topic of the day is on these data blocking practices. So, we’ve seen utilities that, again, they have the information. They have the smart meters. But when a competitive firm goes to them and says we have the customer’s permission, the customer wants to use our product and our service offering, then a lot of utilities will say no. We’re not going to provide that. And there’s a bunch of reasons why we can’t. And it’s up to the state, for the most part, the state public utility commissions or PUCs to order those utilities to comply. So, we’ve had some success in that area. But like I said, it’s still far too little, particularly amidst the inflation crisis that we’re seeing in the power sector right now.
TEDDY DOWNEY: And before we go to Katherine, I have a couple questions. So, just so I have it straight. I read the paper. I’m pretty sure I know what a virtual power plant is. But if we’re looking at it from the customer perspective, a virtual power plant is basically some kind of independent technology platform that helps you be more efficient, helps you use your energy more efficiently, and to not use it when the grid is most stressed. And you get some kind of financial benefit in exchange for doing your behavior that way. Is that a fair way to describe it?
MICHAEL MURRAY: Correct. You’ll get paid. In some places, it could be a credit on your electric bill. Other times, it’s cash or gift cards or cash equivalents. And it’s important to recognize that it could be behavior based. So, it could be for an hour, you do things in your home, walking around turning various things off. But it could also be automatic in a way that you might not even notice. So, you might receive $25 to $75 in exchange for your water heater getting shifted on or off if it’s an electric water heater. And you might not even notice right if that occurs when you weren’t there wasn’t a demand for hot water in your home anyway.
And so, both of those are in play. These service providers sometimes come with installing HVAC equipment, again in your home or in your building, commercial building. A lot of governments and schools and hospitals have been doing this for some time. But it’s the residential market where access to this data needs to be very streamlined because the savings at every individual home level are very small. And so, that’s why you need scalable access to this information on a secure permissioned basis.
TEDDY DOWNEY: So, one last question here. So, it can be automatic, almost like, hey, I’ll turn off paper billing. Instead, you’re just automatically turning on a thing that says just use my stuff more efficiently for the grid. Or turn my EV charger off, turn my water heater off at these times, use them at these hours. So, part of it’s automatic. But part of it could be a text. Like, well, if you just turn your heat off right now, it’s a great thing for the society. Because the grid is being stressed and just put a hat on. It could be anything along all those lines, correct?
MICHAEL MURRAY: That’s right. And those of you in California will be familiar with “Flex Alerts.” So, this is an announcement, generally when there’s a heat wave in the summer and they ask everyone to conserve energy. Amongst sort of grid nerds like ourselves, that’s derogatorily referred to as a “demand donation.” So, they’re looking for free services provided to the power grid from everyday consumers. And a much better, more organized way of doing it is to actually pay for the service akin to the way that you would pay for new generation sources.
TEDDY DOWNEY: And then lastly, you mentioned if I buy more efficient stuff, that also can be rewarded. Is that part of a virtual power plant? Or is that just some kind of state incentive that’s like, hey, buy a more efficient boiler or what have you and you’ll get money? Are those intertwined at all or are they distinct?
MICHAEL MURRAY: They’re very much intertwined. A lot of the energy efficiency programs that we’re familiar with came out of the Arab Oil embargoes. And so, in the 80s and the 90s, we saw a lot of movement in that direction. What’s sort of new right now is that energy efficiency has been viewed as a stable 24/7, 365 resource – you get some aggregate benefit of energy efficiency. And a virtual power plant is focused on a specific time and a place when those savings are materialized. And that’s what becomes particularly valuable in a capacity constrained system like the one that we have.
TEDDY DOWNEY: So, if I have like solar and I have big battery storage capacity and I have an EV that just gives me more opportunity to interact with the virtual power plant is that a fair way to say it?
MICHAEL MURRAY: That’s right. And there’s some efforts underway to get investments in energy efficiency compensated as a VPP. So, replacing an older inefficient heat pump system or a refrigerator with a new one should get the ability to participate with the virtual power plants.
There’s some quantification challenges there of exactly what that savings is so that you’re not overpaying or underpaying for that long-term grid service. So, there’s been a lot of activity on that front but at the core of it is the meter what the electric meter says. So, you should be able to look at your energy usage let’s say one afternoon and compare it to the previous period of time before you made an intervention, before you either behaviorally or through an efficiency upgrade modified your usage, and once we can how that savings is calculated what’s the baseline and then you do a subtraction that should be the monetizable element here.
And let me say also—we stress this in the report—but this is all optional. Consumers can choose to participate in a virtual power plant if they want to. We’re not saying that everybody should be forced into having their electric loads turned off; we’re merely saying that if you have the option you have a lot of discretionary load as a business owner as a large building tenant or as a homeowner. Great—you should be able to participate and so that optionality is what we’re trying to make available to the rest of the market.
TEDDY DOWNEY: And so, Katherine, somewhat inexplicably, or I guess explicably, is exactly what you’re going to do, the sort of unconscionably maybe the utilities are prohibiting this type of obviously good activity from going on with a myriad of absurd, in my opinion, behaviors. If you could walk us through some of the specific harms in the report. I mean, honestly, it’s laughable. I’m reading through it. I mean, it’s all sorts of classic junk fees, classic anti-competitive conduct, just keeping out these independent entities that have really much better incentives than the underlying incentives for the regulated utility, and then also, obviously, the public utility commissions being either corrupt or asleep at the switch, whatever you prefer. But if you could walk us through the harms as you saw them, would love to educate the listener on this. It’s pretty remarkable stuff.
KATHERINE WYSZKOWSKI: Yeah, yeah, of course. And Teddy, thank you so much for having us here. I’d love to actually start with an example of a very successful virtual power plant program, kind of what it could be.
This past summer the Puerto Rican grid operator in LUMA called on tens of thousands of residential batteries to assist in energy shortfalls through their VPP program. LUMA actually even tweeted they were able to dispatch 70,000 batteries and contribute 48 megawatts to the grid. This program is literally preventing blackouts on the island.
As of the summer there were about 160,000 residential batteries on the island. There’s more solar panels. Originally, people were installing solar because they wanted to save money. But after hurricanes Irma and Maria, it really became a resiliency issue. So, you saw this huge surge of customers buying batteries and VPPs have really been able to meet that interim demand of the island’s power needs while they’re still rebuilding the grid.
Customers there are being financially incentivized whenever they participate in these events, meaning they’re discharging energy from their battery and putting it onto the grid. They can still limit how much power is being exported from their battery to meet their own reliability needs. It’s not an all or nothing thing. They can decide how much they want to share and be compensated based on that.
And third-party aggregators are really the ones making this program successful. They were the ones that deployed the solar and home battery systems to cost-effectively serve the needs of the grid. They’re the ones that are calling on the systems and they’re the ones reporting the contribution needs.
It’s not just Puerto Rico which is a very acute example because it is an island and they did have their grid destroyed just a few years ago. But even Portland Gas and Electric has this amazing graph they shared publicly. In the summer of 2024, they had an event. And almost immediately on their chart, you can see a 109 megawatt decrease in customer energy needs across their service territory. And that’s huge. That’s saving so much money in utility bills and providing services to customers and financial benefits.
Unfortunately, as we’ve been talking about, in other states, utilities have been creating these artificial barriers to VPPs. And our report really focuses on the data access issues. We’ve categorized it as implementing unfair contracts, withholding or degrading customer data and imposing monopolistic commission fees.
So, the first one that I’ll touch on, implementing unfair contracts. Utilities have found a way to be able to terminate data access without cause to third parties. Many utilities have imposed their own terms and conditions on data recipients, such as VPPs, without review of state commissions. Most of the terms permit utilities to just shut off access to customer data at any time or any reason without notice or without Commission review. Some examples are Eversource in Massachusetts, Xcel in Colorado, Smart Meter Texas. And even in California where there is a tariff that has been reviewed by the Commission, the utilities there have, in addition, implemented their own terms and conditions and that allows them to cut data access whenever they want.
And so, if that was to happen to a VPP, I mean, utilities cutting off their only source of customer data, it could kick them out of the market. And so, it’s this very significant business risk to enter utility territories that have these sorts of terms and conditions and it is preventing the proliferation of VPPs.
Additionally, utilities have been withholding and degrading customer data. In 2023, the Federal Energy Regulatory Commission received a complaint on information deprivation from a VPP firm called CPower. They claimed that utilities were refusing to share customer approved meter data and blocking cost effective efficiency services. In CPower’s complaint, they did not specifically list which utility and did not outline the examples of data blocking. And so, their complaint was dismissed on lack of evidence.
So, in October of 2025, Voltus, a VPP provider, with Mission:data, filed a similar complaint. But it did in fact list the utilities that were withholding data and documented the processes in which they were withholding data. Utilities have come back and said they have multiple, and even duplicative methods, of sharing data which the complaint included in its documents and it’s frankly just not true.
For example, ComEd in Illinois, it has an electronic data exchange. It has Green Button Connect which is a data sharing platform. It has its own web portal and it allows letters of authorization. But in reality, none of these methods provide the adequate information that’s needed. They limit the number of requests that can be made. They anonymize the customer data. And they’re just not scalable when you’re talking about programs that have 20,000 customers enrolled under a single aggregator.
Another example in New Hampshire alleged that Eversource can’t provide community choice aggregators with negative meter readings for rooftop solar customers. That means whenever a solar customer is making more power than they’re using and they’re sending it back to the grid, the utility billing system is not documenting how much they’re actually sending back. They fill that data with zeros or null. And these customers that are a part of community choice aggregators are not being compensated appropriately because that data is not being given to them.
In Colorado, Xcel shared that they intend to provide degraded data to VPPs. The utility only wants to compensate virtual power plants based on high quality data, the reductions they can see in high quality data. But they only want to share raw data through Green Button Connect with VPPs. And so, this raw data hasn’t been filtered for errors and it could potentially underestimate the actual energy usage. And it can make an aggregator seem to be performing worse than they actually are. This could potentially be a neutral situation if Xcel also used raw data, but they don’t. And additionally, Xcel proposed having their own virtual power plant in which they could compete with others and have the high quality data that they’re not providing to other virtual power plants.
And then the last example I’ll touch on just briefly, because I know The Capitol Forum has actually reported on this , is unfair commission fees. So, utility meters, modern utility meters now, they’ll contain a computer. They’ll contain Wi-Fi connectivity as well as an app store, just like a cell phone. And Itron, one of the metering suppliers to electric utilities, is charging 30 to 50 percent Commission fees to meter-based apps. And while these apps can benefit customers, the meter store is actually subject to arbitrary policy changes that are overseen by the meter manufacturer. And so, they could implement policies that really negatively impact independent app developers.
One of those being commission fees could be altered depending on the service an app is providing. Like if it is providing efficiency recommendations, which in turn reduces customers’ bills, the meter app may increase those commission fees to deter them from entering that market. And the report goes into a lot more depth about the complaints we have and the examples we’ve seen across the U.S. But for now, I’ll hand it over to Daniel unless, Teddy, you have some questions.
TEDDY DOWNEY: Let me ask you a couple questions. Then we’ll get to Daniel. First, going back to the places that did implement a good policy here, what was the political story behind that? Obviously, Puerto Rico, just complete fiasco in terms of their electric grid. They went through a very high-profile bankruptcy. Investors very involved in their utility payments. What happened there that allowed them to build this more resilient, more efficient grid with these VPPs?
KATHERINE WYSZKOWSKI: I think what happened in Puerto Rico is they let the aggregators take the lead and describe what they would need to have a successful VPP program there. And we’ve seen in a lot of other jurisdictions, it is the opposite. A utility is mandated to have a VPP. And so, they outline what they would want out of this, how they’d want it to work, how much they would compensate customers, how they would share data, what kind of events and how often they can call upon them. And so, they’re expecting these VPPs to fit the mold of what the utility wants. And in Puerto Rico [there was] an urgent need. [They were asking] what do you need to make this work?
TEDDY DOWNEY: So, it’s the PUC and the people just either outright distrusting the utility and entrusting the VPPs to come up with a solution rather than being either corrupt or whatever, lazy or asleep at the switch or what have you, to let the utility—which obviously has different incentives. Its incentives, as you pointed out in the report, are to just be inefficient and create more power sources and just be more inefficient and just extract fees and higher rates along the way. Whereas, obviously, these VPPs are incentivized to create more efficiency. I find this hilarious because I’ve spent 13 years doing this and the monopolies are always telling me how efficient they are. So, this is a truly hilarious turn of events here.
But did I mischaracterize what has to happen for something? You need, for a PUC to be successful in this area, it needs to be skeptical of the utility and more cooperative with the VPPs. I mean, it’s not rocket science, but it apparently doesn’t happen anywhere else.
KATHERINE WYSZKOWSKI: Yes, that’s exactly it. And one example I recall in Arizona, utilities there wanted to start a VPP. And the initial number they wanted to compensate customers for participating was so abysmally small. It was just completely unfair and not workable. And that was their starting point. So, they could negotiate to stand up a VPP that no one wants to participate in, but looks like they are putting a good foot forward and are willing to compensate more. And so, yeah, you have to start talking to the VPPs first.
TEDDY DOWNEY: I want to get to Daniel in a second, but just if we take a step back and look at the political moment here, I mean, do you think it is politically sustainable to side with the utilities over the VPPs going forward for these politicians? I imagine if the PUCs, and the parties that are putting these PUCs up, affiliated with them, are just allowing the utilities to keep jacking up their rates and doing nothing to actually, solve their problems, you’ve got blackouts, you’ve got high rates, you’ve got lack of resiliency. These all sound like problems that, at a certain point, you’re going to pay for it politically, not just out of the pocketbook of the customer. Or you’re going to pay for it politically because the customer is getting so harmed monetarily. Obviously, looking back at the past 30, 40 years, utilities have had their way with all this, but going forward, what do you think about the political prospects that you’re going to see a backlash or that things might change?
KATHERINE WYSZKOWSKI: Yeah, absolutely. I think politically, you really have to consider that VPPs are an opportunity for customers to take control of their utility bills. Because historically, I mean, we’ve seen some changes now with solar and people being able to put storage on their house, but historically, you use energy and then you’re billed whatever the utility and the Commission say you’re going to be billed. This is an opportunity for customers to be notified like, hey. Right now, if you turn down your thermostat, you will get compensated, your bill will be reduced. And they want that control. They want to be able to either take very simple measures, or automated measures, to reduce their bill. Politically, that is a win-win for customers, for politicians, and taking back your money. If I can be paid to turn down my thermostat four times during the summer, yes, I will do that. I would not mind.
TEDDY DOWNEY: Yes, this is a direct appeal right now to any D.C. PUC or anyone in charge of that policy. You will be punished for keeping my bill 40 to 50 percent higher than it was last year. So, Katherine has given you fair warning. You will be kicked out. Daniel, let’s get into the weeds on the antitrust, my friend.
DANIEL HANLEY: Yes, absolutely.
TEDDY DOWNEY: Where do the antitrust laws come in to protect the citizenry from this type of fee gouging?
DANIEL HANLEY: I just wanted to comment on what you previously said. Because the way you said it, what obviously good this virtual power plant idea would do, and just the laughable conduct taking place, and I completely agree with you. That’s what’s been such a pleasure working on this report is it’s just like there’s so much obvious harm going on. It’s just such an obvious application of the antitrust laws here. You have often incumbent monopoly firms, often state-sanctioned, and they are clearly taking advantage of their position to deploy various tactics to literally prevent the kind of competition that we believe the antitrust laws are designed to promote from existing at all.
And what’s really great here is that the antitrust laws, especially for the kind of conduct that Michael and Katherine identified and that exists on the top half of our report, the antitrust laws are really a potent weapon here that can be deployed quite easily.
But actually, what’s oddly here, and I’ll get into detail a little bit of this later, is that the antitrust laws actually, both could be a sword for consumers and even competitors to the electric utilities. But oddly, the antitrust laws also provide important shields for the utilities themselves. But our report, the latter half of the third section, actually provides a sort of manual, if you will, to overcome those barriers so that the kinds of litigation we are promoting in our report can actually take place. I’ll talk about some of the major sword aspects, how the antitrust laws can be used.
So, the main one is that we identify in our report as tying arrangements. Many of your listeners are probably familiar with that because of the recent Google litigation involving digital advertising, where Google tied both their publishing server and advertising exchange, and that was held to be unlawful under the antitrust laws. The tying arrangements are also per se unlawful. So, as long as you follow the Supreme Court’s four-factor test, boom, the defendant there violates the antitrust laws.
And so, how we identify this problem, or how we think of how this legal avenue can be utilized, is that you would basically directly attack, one, the utilities’ uses of their own VPP services. Because some utilities actually provide their own services, but they don’t actually open it up to third parties. And we think that the mandatory bundling or the mandatory tying of these services is problematic because, as Michael articulated earlier, that there’s a massive conflict of interest in actually the utilization of this service to lower electrical demand, lower consumer electric bills, ensure the proper allocation of electrical generation is done in a timely manner. We actually, think that opening up to third-party competition is essential to ensure that conflict of interest is kept in check or is eliminated altogether. So, you can use a tying claim to target the mandatory bundling of electrical utility services in their own VPP service.
Another way, which is sort of a very close cousin to that, is exclusive deals. Where, again, as made much more prominent in the news because of the first litigation, antitrust action against Google started under the first Trump administration, targeting Google’s agreements with device manufacturers for their defaults for their Play Store or certain apps. We look at that exclusive deals is a really potent avenue here when a utility either says that consumers have to use a specific VPP only. Again, the conflict of interest still exists there. And we think that this avenue, again, the controlling law is very favorable or still favorable. And you can, again, break open the VPP market for consumers so that consumers can pick amongst a variety of VPPs. Or that there would be plenty of VPPs to choose from to ensure that competition exists and is not just given solely to one provider.
Another avenue here, which is becoming much more prominent, is actually what I talked about when I was invited to talk with you in my previous discussion. It was about refusals to deal, a special area of law, that I, as you know, Teddy, I have infinite fascination with. which I’ll discuss a little bit here. We want to make sure that the utilities are engaging when VPP services are required or indeed when they could be a possibility or when they exist in general, that the utility is required to either provide access to these services or provide them all together. And that we would basically prohibit a situation where you have a VPP, the incumbent utility wouldn’t just be able to just cut them off entirely.
And the controlling law there is not as unfavorable as many have previously perceived, that we talked about previously, the Verizon v. Trinko case. The idea surrounding that case creating a somewhat—or a perceived—insurmountable barrier to antitrust litigation is actually not as strong as many have perceived.
And what makes this particularly timely, our report particularly timely, is that the Fourth Circuit, in a case called Duke Energy v. NTE, actually, dispelled that notion and gave just a beautifully written section which said, yeah, Trinko is not this narrow case. The antitrust laws don’t prohibit—even in the case of a “regulated” entity like electrical utilities—that the antitrust laws aren’t a barrier, of course, absent some express will of Congress because they can always modify how the antitrust laws apply. But that isn’t the case here. And that litigation can go forward in this regard.
And, of course, there’s always the wonderfully flexible Congressionally designed to be flexible Section 5 of the FTC Act. We acknowledge that the FTC really hasn’t been in the energy game, the energy sector game. A lot of the antitrust litigation that’s in the energy space, under the antitrust laws, has actually been relegated to the DOJ. But these sorts of firewalling offer, in cases of the oddly like Robertson-Patton litigation, where the FTC has been the primary enforcer, even though the DOJ can enforce laws, a lot of these are just like handshake agreements, informalities, that don’t have to be adhered to.
So, despite the fact that the FTC really hasn’t been involved that much in the energy sector, our report provides a clear avenue for the FTC to use its broad Section 5 authority, which prohibits unfair methods of competition and extends beyond the boundaries of the Sherman Act and Clayton Act to target the kind of conduct we’ve outlined here.
TEDDY DOWNEY: So, really quickly, if you’re the FTC and Trump is saying, hey, you need to do something on affordability—and by the way, they have plenty of leeway over technology companies. And in many respects, since this is an online platform, in some ways, involving technology, you could think of it as a tech company, the FTC should absolutely jump at the chance to get involved here. Is that a fair characterization? I mean, I’m just looking at the nice language that the White House and FTC Chair are saying about the affordability crisis, how they want to do stuff on affordability. Certainly, have not seen them do anything in that area yet. At least in the meticulous coverage that we do here. But this would be a good opportunity to do something like that.
DANIEL HANLEY: Yeah, I completely agree with your assessment. This is like something that critics of the FTC Act will say, oh, it’s open-ended. The FTC Act is open-ended. But really, I think that’s designed to distract us from that. FTC enforcement is, in part, not just addressing a perceived or an actual market, but also about what are you prioritizing? What are the underlying values of a particular administration to say, this is how we’re going to use the limited resources of the federal government and put forth an enforcement agenda that either is coherent or targeting a specific problem that may not be able to be reached by other enforcement agencies, whether that’s state, whether that’s state enforcement, private litigants, even the DOJ?
Because, again, the FTC Act is, and we detail this in our report, only the FTC can enforce the FTC Act, which, of course, is broader than the Sherman and the Clayton Act and targets incipient threats. It also doesn’t have certain legal limitations that the other councils have. Like they don’t have the need to define a relevant market, for example, which can be, in many cases, can be a profound sink of dollars in enforcement resources, as often the case in traditional monopolization suits on the Sherman Act. So, yeah, I definitely agree with your assessment there.
TEDDY DOWNEY: And then let’s quickly talk about state laws. Could they come into play here? I mean, a lot of these utilities have a range of state laws that regulate them. I would imagine there’s some, hey, you can’t just foreclose competition. I mean, obviously, in one respect, it’s a regulated monopoly, but there’s got to be some state laws that create some opportunity here.
DANIEL HANLEY: Yeah, undoubtedly. Again, there are certain, again, 50 states, 50 different sets of rules, and certainly, I’m sure there’s different exemptions that some states have that others don’t. The state laws are, in many cases, just as profound, and especially in the case that states also—I forget the exact number, but it’s definitely more than a dozen—states have analogous authority to the FTC prohibiting unfair methods of competition. Again, literally modeled after the FTC Act.
TEDDY DOWNEY: And if you were looking at the report—and you’ve looked at a lot of utilities, you’ve looked at the interconnection companies or entities—if you had your, hey, these are the top five that should get sued for this, what would your top five be, or top three? Or what’s the most layup lawsuit? We’re happy to obviously continue to investigate this ourselves. But I’m curious if you had any immediate takeaways, well, this is the most flagrant? You mentioned ITRON earlier. There’s been regulatory matters coming up to allow or facilitate this kind of sort of monopolistic contracting. But I’m curious if the report had any utilities or interconnection entities that, hey, this is just the most obviously anti-competitive conduct that should get sued.
MICHAEL MURRAY: If I may, I think one of the more pressing matters involves the home electronics market. So, some utilities have exclusive relationships where the electric meter is allowed to communicate using a radio signal to devices in the home, but some of those devices are the utility’s unregulated affiliates. And so, this really harkens back to the pre-1970 AT&T days when the telephone handset had to be purchased from Western Electric, which was part of the AT&T empire. And so, there’s been several states that are facing this type of issue right now.
I actually heard Tim Wu on a podcast recently say, “I think we did electricity pretty well. The electric utilities aren’t controlling each and every end use, everything that plugs into the grid.” And maybe largely speaking that’s true. But in the consumer electronics space, I think they really have put their thumb on the scale to prevent broad adoption of virtual power plants.
TEDDY DOWNEY: Was it getting at that if you plug something into the wall, you’re not paying a fee for it, depending on what you’re plugging in. But what you’re saying is that the minute that you involve a utility tool, like a meter, they are layering that on. They are layering on that kind of control and fees and things like that, and how you can communicate with that data. So, it’s not the underlying electrical current, but it is the access to the data about how that current is coming and going.
MICHAEL MURRAY: Correct. And so—we talked about advanced meters—well, there’s a new generation, sometimes called advanced metering 2.0, that’s being deployed nationwide. And these meters have Wi-Fi on them. And they can transmit a real-time signal to your electric vehicle charger, to your water heater, whatever it may be. So, if you wanted your energy to stay under a certain threshold, like to save you money, or you wanted proof of your reduction in a virtual power plant, you could really use that real-time data. And this is where utilities in some states, not all of them, have said, we have this exclusive relationship with just this one company who happens to be our affiliate.
I will say that in some other states like California, they have had an open access, a nondiscriminatory device connection provision so that any customer bringing any device should be able to get that real-time usage data. And so, it’s very hard to take the utilities’ arguments about the cybersecurity risk of these unvetted devices talking to our meters very seriously, when this has worked in some states without issue for several years.
TEDDY DOWNEY: Yeah, I think it’s also kind of hard to say that big monopolies are good stewards of our data and don’t have breaches and aren’t a cybersecurity risk. That’s a bit rich, if you ask me. But Daniel, you’ve got to have some names. Katherine, give me a couple of names, give me a couple companies, that you think, hey, might be low-hanging fruit here for litigation. Or do I have to go figure this out on my own? I’m happy to do it, but I feel like the names are on the tip of your tongues here.
KATHERINE WYSZKOWSKI: If you read the report I feel like I can say this on the podcast, DTE Energy in Michigan has that exclusive deal, that Michael was explaining, where there’s one company that is a DTE affiliate and is the only one that can provide real-time data through the smart meter. Interestingly enough, they are able to bill customers on their utility bill. That is not something we see for other providers. Any sort of other utility provider doesn’t get to be a line item on the bill. In this case, it’s pretty unheard of, but they’re there.
TEDDY DOWNEY: That’s perfect. We’re going to look into this DTE Energy. I will have my colleague here get on that ASAP.
I have a couple of other questions. Then maybe we’ll take a listener question or two. When you take a step back, is there other laws—if you’re looking at the problem here, one of the issues is corruption at the public utility Commission level.
First, there’s a political dynamic. This is like, get these people out if they’re just allowing rates to go up 40 percent in a way that the populace is just going to flatly reject going forward. I don’t think I’m going out on a limb. I think if you’re supporting 40 percent increases, you’re going to get kicked out of your job.
Second, there’s another layer, which is just the corruption. I’ve been dealing with these public utility commissions, again, for 13 years as a reporter. I just see such obvious problems. Payments directly to these people for God knows what, speaking gigs or trips or whatever they’re doing, hiring them afterwards, openly trying to attract the utility companies to the regulators. Just basically trying to make it as clear as possible that if they do what they want while they’re there, they’ll get a cushy job afterwards.
We saw this in the Pepco-Exelon merger in Maryland. After that merger was approved, shockingly, by a progressive public utility commissioner. She just went to a group that was funded by the utilities right after. I don’t even know if the deal had closed yet. She had already left and gone there.
There’s story after story. Are there anti-corruption laws—I know we’re not in a moment where corruption laws are really aggressively enforced—but are there corruption laws that these PUC members should be worried about that they could get looped into some antitrust investigation, some corruption investigation? Or is that just a separate conversation?
MICHAEL MURRAY: I’ll take a stab at that one. Some states, after some scandals—California comes to mind —have passed some rules requiring advance notices of what are called ex parte communications. Frankly, that’s often more of a burden on staff and interveners than it is on the commissioners who originally caused the scandals in the first place. I think those help. It certainly helps with transparency.
But to me, the problem of corruption within the PUC highlights the role for other law enforcement agencies, FTC, DOJ, et cetera, to be involved here. Another way you can do it is the state—legislature, if we’re afraid of these exclusive ties and utilities forming these relationships with behind the meter, home devices for virtual power plants you could just pass a law that restricts that completely.
That’s what Texas did. There’s very bright line legislation associated with restructuring about 20 years ago that says you’re just simply not allowed to provide these services if you’re going to be a regulated utility. And that takes some of the temptations out of the system.
TEDDY DOWNEY: That’s great. We have a couple questions here. Let’s see if we get to them. I know we’re out of time. Here’s our first listener question. It’s not really a question, but I’m curious to get your reaction. Have a look at what the Australian Energy Markets Commission is doing mandating a new rule, real-time data access for consumers. Is that on your radar? Is that a model for state and federal policy makers here? Have you all looked at that at all?
MICHAEL MURRAY: I’ve spoken with them about a year ago. So, my information is out of date. I know they were considering a rule at that time. Australia is similar to the United States in the sense that there’s a patchwork of different eras of technologies in the meters across the country, which is very large. So, I’m not sure where that’s landed. I don’t have any more information on that. But this is an issue that the UK has dealt with, in some respects, with their smart meter deployment. So, I would expect more and more countries, as Wi-Fi and these technologies have a lower cost, they get embedded in more electric utility equipment. We’re going to see more of this in the future.
TEDDY DOWNEY: Last question here is about the growing interdependence of utilities with Big Tech due to AI energy demands. I’m curious how the data centers fit in here. You all are talking a lot about the incentives to be efficient. How does that change when you’re throwing all these data centers on top of it? Does it make it even more crucial to have these types of VPPs? I would love to get your reaction to that.
MICHAEL MURRAY: So, my quick take is that all new electric loads whether it’s data centers or vehicle electrification or electrifying heating in the Northeast have the potential to actually reduce rates. Because if you have more throughput through a fixed infrastructure system, you do the math and you can get lower rates. Where you get often higher rates is when there’s cost shifting onto residential rate payers or when the peak system demand is affected—if the large data center, say, contributes to that peak system demand and then those costs get socialized, that results in a cost shift.
A few years ago, we were talking about electric vehicles as being beneficial and reducing rates for everyone. It depends how you do it and this is where it gets a little complex. But I think that a positive move that I have seen is when data centers are looking for interconnections with utilities, it could really help to couple that application with virtual power plants.
So, if data centers want 500 megawatts here or there, it might actually appear to be much less than 500 megawatts because it’s not at the peak time. It’s not coincident with when the grid itself is at peak demand. And if you can achieve that through virtual power plants, that sounds really attractive. We have a lot of that in the power grid. There are some metrics that maybe only 50, 60 percent of the system is even used. So, again, we can use more energy. It just has to be at the right times. And this is where VPPs can help.
TEDDY DOWNEY: Last question here. I’ve got one more question and then I promise I’ll let you all go. Are there any places besides Puerto Rico and Portland that you all are seeing as moving in an interesting direction that we should pay attention to? So, where’s the next Puerto Rico, the next Portland, where you’re going to see some interesting policy and/or appreciation of the VPP arguments?
KATHERINE WYSZKOWSKI: So, it’s hard to say what the next Puerto Rico is going to be. That’s a very specific situation. But there are a lot of states looking at VPPs and considering them. One state we’ve been engaged in is Maryland. They passed legislation called the DRIVE Act that does require the beginning of a VPP program. And they are working through the details. Actually, recently the filings the utilities submitted on their VPPs and what they want to implement were rejected because they did not address data access issues. And so, now we’re waiting to see how the utilities will address this in their next filing and if they will be approved by the Maryland Public Service Commission.
TEDDY DOWNEY: Fabulous. Fabulous. Well, we’ll keep an eye on that. That’s our neighbor here. We’re based out of D.C. So, it should be easy for us to pop over to those Commission meetings, hold some powerful people accountable for a change.
Michael, Katherine, Daniel, this was amazing. I learned a ton. I’m super excited to have our people here to keep an eye on this issue, see how much antitrust enforcement and litigation comes out of it. Seems like a ripe area with everything we’re hearing about affordability and politics these days. So, thank you so much for doing this today.
MICHAEL MURRAY: Thank you, Teddy. It’s great fun.
KATHERINE WYSZKOWSKI: Thank you.
DANIEL HANLEY: Thank you.
TEDDY DOWNEY: And thanks to everyone for joining us today. This concludes the call. Bye-bye.
