State-granted monopolies protect utility profits by allowing private companies to operate without competition while guaranteeing a financial return on their investments. According to the authors of the newly released report, state regulators set electricity rates that are specifically designed to cover both operating costs and a designated profit margin for shareholders.
The report notes that “Investor-owned utilities typically operate as regulated monopolies within defined service territories, where customers cannot choose another provider and state regulators approve the rates utilities charge.” Furthermore, the analysis points out that “Traditional rate-of-return regulation guarantees utilities a profit regardless of efficiency or customer outcomes.”
In simple terms, because you cannot choose your power company, the government steps in to decide what they can charge. However, the current system ensures these companies make money on every piece of equipment they build, like power plants or transmission lines. Because the profit is guaranteed by law, utilities have a massive incentive to spend more on infrastructure, as it directly increases the amount of money they are allowed to collect from families and businesses.
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.
