Conservatives are worried a federal agency’s proposal to limit investment in public utilities could become a stumbling block for President Donald Trump’s energy agenda.
Rick Perry, a former U.S. Energy Secretary, said the president should be watching the Federal Energy Regulatory Commission, an independent agency within the Department of Energy that regulates the interstate transmission of electricity, natural gas, and oil.
“Unfortunately, the Federal Energy Regulatory Commission is now considering policy changes that could jeopardize the access to capital needed to bolster American energy reliability,” Perry wrote in an op-ed. “At a time when the nation’s energy infrastructure demands urgent investment, such changes could set us back significantly.”
Perry isn’t alone. The Electric Power Supply Association, Edison Electric Institute and the American Council on Renewable Energy also warned against the proposal in a joint letter.
“Unnecessarily deterring or raising the costs of investment in the electric industry works directly counter to the Commission’s statutory mission to promote plentiful supplies of electric energy at just and reasonable rates,” the letter said.
In late 2023, FERC issued a Notice of Inquiry regarding its policy of granting “blanket authorizations.” The policy allows investors and funds to acquire shares in public utilities up to $10 million without requiring a review by the commission.
“FERC’s recent notice of inquiry threatens to upend the existing framework for granting blanket authorizations to investment companies under the Federal Power Act. These authorizations have been instrumental in allowing capital to flow into the energy sector, enabling much-needed investments in public utilities,” Perry wrote. “If FERC adopts its proposed changes, requiring additional oversight for investments of $10 million or more, it will stifle the very investment that America’s energy infrastructure desperately needs. Investors, faced with increased regulatory hurdles and costs, may shift their capital to industries with fewer barriers, leaving the energy sector starved of resources.”
Cory Gardner, the former U.S. Senator from Colorado, said FERC could “imperil” Trump’s plans.
“The president and his team, including both Secretary of Energy Chris Wright and Secretary of Interior and Chairman of the newly formed National Energy Council, should pay attention to activity at the Federal Energy Regulatory Commission that could imperil the President’s objectives for American energy dominance needed to win the important AI race,” he wrote in an op-ed. “The Commission claims the potential rule change is a response to a ‘precipitous’ rise in index fund investment – as if that were bad – and to prevent investors from consolidating controlling interest in utilities. In practice, however, it could choke builders’ access to capital and discourage the development necessary to secure and grow our energy grid.”
The Pacific Research Institute, a California-based free-market think tank, said the FERC proposal runs counter to the commission’s mission. Wayne Winegarden, senior business economics fellow with PRI, warned that the policy change would threaten the reliability of energy.
“Imposing more stringent requirements on blanket authorization would have adverse consequences,” he wrote. “With fewer (or worse zero) investors qualifying for blanket approvals, investments by retail investors would be limited, including common investment vehicles such as mutual and index funds.”
Not everyone agrees.
Tyson Slocum, director of Public Citizen’s Energy Program, warned about potential conflicts.
“Public Citizen will raise competition concerns about BlackRock controlling significant generation assets at the same time that the company has been granted blanket authorization to own up to 20% of any public utility’s voting shares,” he wrote. “There are significant conflicts and potential detrimental impacts on competition to allow an investment manager the size of BlackRock to obtain blanket authorizations at the same time that it directly manages and controls large fleets of Commission-jurisdictional power assets. The Commission must disallow blanket authorizations for any investor that simultaneously owns and controls generation.”
Even Elon Musk has weighed in on the issue.
“As I said a few years ago, the AI scaling constraint will move from chips to voltage transformers to electricity generation,” Musk wrote on X. “That is worrying for US leadership in AI long-term.”
