Policymakers can curb rising electricity costs by lowering the profit margins state regulators allow utilities to collect and by reforming the traditional ways these companies are rewarded for building infrastructure. According to the authors of the newly released report, officials have the authority to set stricter benchmarks for investor returns and to provide better legal representation for the public during rate negotiations.
The report explains that “States that adopt more conservative benchmarks, better calibrated to current market conditions, reduce the profit margin embedded in customer bills.” To further protect consumers, the authors suggest that regulators should “Reform ratemaking” to move away from systems that guarantee profit “regardless of efficiency or customer outcomes.”
In simple terms, this means that the government groups that oversee power companies can choose to limit the amount of money those companies keep as profit from every dollar a customer pays. Instead of letting utilities earn more money just by spending more on new equipment, these officials could shift to a system where companies are only rewarded when they actually improve service or lower costs. By hiring experts to speak up for regular people during these complex financial meetings, states can ensure that utility owners do not get an unfair advantage at the expense of the average household.
The Energy & Policy Institute released its report “Paying for Their Profits: How Ratepayers Foot the Bill for Soaring Utility Profits” in March 2026. Authored by Daniel Tait, Sue Sturgis, and Shelby Green, the analysis tracks financial data from over 100 investor-owned utilities to reveal the significant role corporate returns play in driving up household electricity costs.
