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Indiana Attorney General Todd Rokita, along with 19 other state attorney generals, have sent a comment letter to the Federal Energy Regulatory Commission that questions federal authorizations for investment companies engaging in socially and environmentally conscious investing.
The comment letter argues that the states are directly impacted by the environmental, social and governance issues raised in a FERC notice of inquiry because utilities in their jurisdictions have been subject to coordinated pressure campaigns and electricity purchasers have been subject to inflated prices.
“Our office along with Utah are leading a 20 state coalition to fight back against Biden’s radical ESG agenda. Blanket approval for companies like Blackrock leads to higher prices for everyday Hoosiers. The anti-competitive actions of large investment companies is a threat to our economic security, health, and safety,” Rokita wrote on X.
The coalition of attorney generals wrote that the states took action to urge FERC to carry out its duties under FPA and follow its rules in the context of horizontal agreements among asset managers.
“The States themselves consume energy, and decisions by utility companies directly affect the reliable and affordable supply of energy to the States. This creates another direct pecuniary interest in this matter. The States also receive taxes from economic activity, and under basic economic principles, higher energy prices reduce economic activity,” the comment letter stated.
A pair of the holding companies the states have identified under the Federal Power Act are Blackrock and Vanguard.
The attorney generals also argued that the commission’s policies related to blanket authorization under FPA section 203(a)(2) must fully cover “holding companies” under the FPA, which includes “associations” or “organized groups” that seek to influence utility operations.
“The critical point is that organized groups, which must obtain FERC approval, are not seeking or receiving it through blanket authorizations or otherwise. As a result, each such group is not committing to FERC to operate as passive investors that do not seek to influence control of utilities, to comply with the fiduciary duty to act solely for the financial interest of investors, and to keep its collective ownership under 20%,” the comment stated. “In sum, the existing statutory scheme and FERC requirements designed to promote competition and protect utility consumers are not being applied.”
The letter further stated that FERC should require the same commitments from association or organized groups of asset managers that it normally requires in blanket authorizations and also require they adhere to their fiduciary duties.
“These conditions for blanket authorization are critical to ensuring that recipients of such blanket authorizations do not use their power to harm competition or otherwise contravene the utility’s public service obligations,” the letter stated.
Lastly, the comment stated that the comments related to what constitutes control of a public utility for purposes of requests for blanket authorizations and what factors the commission should consider in evaluating control.
“These requirements will greatly assist FERC in ensuring that asset managers that receive blanket authorizations are not improperly influencing or controlling utilities in a manner that is not consistent with the public interest and the FPA,” the comment letter stated, adding, “FERC’s statutory duty is to take all practicable steps within its jurisdiction to ensure robust competition among electricity providers and a reliable and affordable electricity supply for consumers and businesses. The anti-competitive actions of large investment companies risk serious harm to our States. We thank FERC for providing the opportunity to comment on this important issue that affects our States’ access to affordable and reliable power. This issue directly affects not just our States’ economic security but also the health, safety, and welfare of our citizens.”
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