Democrats Are Upset About Record Utility Profits, But Did They Contribute to Them?
Our new utility profits dashboard reveals a striking relationship
Democratic lawmakers are reportedly upset about utility companies earning record-breaking profits—but did their policies contribute to them?
Our new utility profits dashboard suggests the answer is yes.
Our analysis will showcase the findings of our new dashboard, and paid subscribers can explore the dashboard for themselves by clicking here.
Big Profits for Big Power Companies
There is no question that utility profits are indeed soaring across the country.
Our analysis, which examined the top 50 U.S. utilities using S&P Global Market Intelligence data and ranked them by cumulative net income from 2018 through 2025, found that profits for these 50 utilities rose by 75 percent over this period, as shown in the graph below. (Click here to access the dashboard to examine the data for yourself).
As it turns out, liberal energy policies helped support these record-breaking utility profits using two key mechanisms. First, state-level mandates for wind and solar require utilities to generate specific amounts of electricity from these resources, thereby spurring the buildout of wind and solar capacity. Second, generous tax credits associated with wind and solar projects reduce the taxes utility companies owe, bolstering their bottom lines.
The Baptist and Bootlegger Breakup
Before we examine the data, it is worth noting why Democrats are increasingly speaking out against electric utilities for raising rates on customers, per E&E News. As reported:
For years, Democrats focused much of their political fire on the fossil fuel industry, tying oil and gas companies to volatile gasoline prices. But as electricity bills become a more visible household expense, utilities — and their executives — are attracting more attention.
While utilities have long been regulated and challenged at the state level, Democrats in Congress are increasingly signaling they want a role in reshaping how the industry operates.
This new tenor may mark the beginning of a rift between Democrats and utilities, which have had a largely symbiotic relationship for the last two decades. Utilities built the wind and solar resources that Democrats demanded and supported their regulations on carbon dioxide emissions from power plants, and in return, utilities were allowed to laugh all the way to the bank while lawmakers celebrated their commitment to the climate.
This dynamic helps explain why Democratic lawmakers were completely silent when electricity rates and utility profits began rising dramatically in 2021—undoubtedly because Joe Biden was still president, and he had recently signed the so-called Inflation Reduction Act.
Growing public resentment over higher electricity prices has interrupted this silent partnership. One source of potential friction is a proposal by liberal lawmakers to hold down power prices by limiting the utility profits they tacitly endorsed in the recent past.
The “Lowering Utility Bills Act”
Democrats introduced the “Lowering Utility Bills Act” (H.R. 8568) aimed at lowering the return on equity (ROE) earned by utilities on new investments and requiring “the Federal Energy Regulatory Commission to set a ‘zone of reasonableness’ for utility ROEs based on expected U.S. equity market returns over the next decade…”
One of the sponsors of the bill noted the following about the legislation:
This bill is saying all of those calculations that you’re doing for that return on equity, those have got to be thrown out the window, and you need to think about this in terms of what’s a fair return, not the price gouging that’s happening now.
Given that utility companies are regulated monopolies, determining reasonable ROEs is a fair topic of discussion, and perhaps they should be lowered. However, the ROE is only half the discussion. What matters just as much, and possibly even more, is what the ROE is being applied to—as in, the rate base.
How Utilities Make Money
In much of the country, utility profits, also known as returns, are a product of the ROE, which is the percentage utility companies can earn on their investments, and what is known as the “rate base,” or the value of utility assets (power plants, transmission and distribution lines, and even new corporate offices) that the utility is authorized to earn a return on.
Profits = Return on Equity x Equity Rate Base
This is baked into revenue requirement formulas that determine what utilities are allowed to recover every year, and thus determine the electricity rates that are charged to customers. With this in mind, utility companies can earn more profit by doing two things: increasing the approved Return on Equity, or increasing the Rate Base by building more infrastructure.
For years (almost a decade), we have warned that mandates for wind, solar, and battery storage, as well as electrification mandates, and the premature retirement of depreciated coal and nuclear plants, would force utilities to spend billions on wind turbines, transmission lines, solar panels, battery storage facilities, and natural gas plants to replace perfectly good coal facilities, thus increasing the “Rate Base” portion of the equation above.
There is no question as to what is inflating utility rate bases, or net spending, in recent years.
The graph below shows the rate base of 88 companies from 1988 through 2025 compared to the growth of wind and solar in the U.S. Notice how rate bases were largely flat from 1988 to 2004 and only started increasing once the wind and solar buildout started.
What’s interesting about this is that rate bases were flat from 1988 through 2004, when the country was still experiencing significant load growth. And despite electricity demand remaining largely stagnant from 2004 through 2025, rate bases and net utility spending increased by more than 300 percent. This spending wasn’t to meet new load growth, but to satisfy net-zero policies that required a massive buildout of new generation resources to reduce emissions.
Electricity rates show the same relationship—from 1990 to 2004, electricity prices increased by 16 percent, or about 1 percent per year, compared to a 70 percent increase between 2004 and 2024, or 3.5 percent per year on average.
This dispels the notion that load growth necessarily leads to increasing electricity rates, which is a prevailing narrative about data centers, and that energy policies play a very significant role.
Our most comprehensive piece on this topic to date, Green-Plating the Grid: How Utilities Exploit the “Energy Transition” to Rake In Record Profits, explains how these capital expenditures for the net-zero movement drive up utilities’ profits.
Considering that wind, solar, and storage constituted 72 percent of the nameplate capacity additions in the United States since 2015, the hefty paydays for utility executives and their shareholders stem, at least in part, from the energy policies liberals have long championed: federal subsidies for wind and solar, state-level mandates, and federal regulations forcing coal plants to retire.
In reality, there are only a few avenues for keeping utility profits in check, and data from S&P Global suggests none of them include subsidizing or mandating a massive buildout of intermittent resources.
The Data Deep Dive
We compiled a list of utility net earnings and compared it with the owned wind and solar capacity of the top 50 utility subsidiaries by cumulative net income in the United States from 2018 through 2025, using S&P Global Market Intelligence and EIA Form 860 data.
Of the 22 utilities that meaningfully changed their wind and solar share of the fleet between 2018 and 2025, 14 showed strong relationships between utility profits and wind and solar share, which we defined as having an R² value above 0.59.
The top six utilities, based on the strength of the correlation between rising utility profits and the share of overall capacity from wind and solar, are shown below, including Duke Energy Florida, Northern States Power Company (NSP), Florida Power and Light, Consumers Energy, and Wisconsin Power and Light.
We have written about NSP and recently detailed the energy landscape in Wisconsin, so the remainder of this piece will focus on the utilities in Florida, Iowa, and Michigan.
Florida Man Makes Record Profits
One surprise in our analysis was the prevalence of Florida utilities in the Green-Plating analysis. At first, we thought that parts of the strong statistical relationships between utility profits and renewable percentages might be explained by expenses needed to harden transmission and distribution infrastructure from hurricanes.
However, a conversation with Jacob Williams, the head of the Florida Municipal Power Agency (FMPA), suggests it is, in fact, the Florida solar buildout that is doing much of the heavy profiteering.
The graph below shows that bills for municipal utility customers have risen by only 5 percent since 2010, while bills for the state’s investor-owned utilities have risen by 38 percent.
What explains this difference?
Williams noted that the municipal utilities often use (and pay for) Florida Power and Light (FPL) and Duke Energy Florida’s (DEF) transmission system, so these costs would be roughly equal between municipal and investor-owned utilities. Municipal utilities also have to harden their distribution systems for hurricanes, and had fewer outages in minutes than Duke and Tampa Electric in 2025.
This leaves the resource portfolio.
FPMA’s resource portfolio consists of 81 percent natural gas, 10 percent coal, 5 percent nuclear, and 3 percent solar. In contrast, 18 percent of FPL’s mix was solar in 2025, and Duke Energy Florida’s portfolio consists of 11.3 percent solar.
While FPMA also has solar, the timing of when the solar was added matters. Solar costs have been rising steeply from less than $30 per megawatt hour (MWh) since the end of 2019, with Level 10 reporting roughly $64 per MWh in April 2026. Rather than only buying solar when it was affordable, FPL and DEF have continued investing in solar, incurring higher costs on their systems and boosting the utility’s profits.
Consumers Energy, Michigan
Consumers Energy was adding wind capacity even before Michigan’s legislature passed a 100 percent carbon-free electricity mandate in 2023, which required that utilities generate 100 percent of their electricity from carbon-free sources by 2040, with interim requirements of 50 percent renewable electricity by 2030 and 60 percent by 2035.
The legislation also imposed stricter energy efficiency standards and expanded state authority over transmission and generation siting, taking away local siting control for most larger projects and giving this power to the Michigan Public Service Commission (PSC).
Since 2018, Consumers added 622 MW of wind capacity, and wind is now over 10 percent of the capacity mix. Additionally, Consumers was allowed to continue recovering costs and earning returns associated with the coal plant it retired in 2023, further supporting the company’s bottom line even after the facility stopped generating electricity.
During this time, profits for Consumers Energy have grown by 60 percent.
It’s no wonder, then, that Consumers Energy is among the top ten most expensive investor-owned utility companies in the Midwest, along with Wisconsin Electric Power and DTE Electric, which are also featured on the R² rankings above.
MidAmerican Energy: Warren’s Tax Credit Buffet
MidAmerican Energy is a fascinating case study that merits a deeper dive in the future. For now, it’s interesting to note that the company’s profits and installed wind have soared, but its rates have not.
EIA data from Form 861 show virtually no increase in MidAmerican’s All-Sectors’ electricity prices from 2018 through 2024, despite the company’s profits growing by 47 percent.
The ability for MidAmerican to increase its profits and wind portfolio without raising rates for customers is somewhat of an anomaly in the utility world, but it is explained by the fact that Warren Buffett uses the wind production tax credit (PTC) to profit his other companies.
PTCs allow utilities and project owners to receive a tax credit for every megawatt-hour of electricity produced by qualifying wind facilities during the first decade of operation. Unlike a tax deduction, which merely reduces taxable income, the PTC directly reduces taxes owed on a dollar-for-dollar basis.
These tax credits are especially valuable to conglomerates like Berkshire Hathaway because the credits can be used to offset taxes owed by the company’s other profitable businesses. Additional business income would generally be taxable, but federal production tax credits directly reduce the company’s tax liabilities instead. In effect, the federal subsidies used to promote wind power also reduce the tax burden of one of the richest men in America.
Conclusion
The data tell an inconvenient truth for liberal policymakers who are suddenly upset about utility returns.
Utility profits are indeed soaring, and they are the result of investments in wind, solar, and battery storage projects and the lavish federal subsidies paid to the utility companies that own them—decisions and policies endorsed by the very Democrats now complaining about the results.
Don’t forget to become a paid subscriber so you can have fun exploring the dashboard for yourself.
When utilities need power they can count on, they choose gas by Sarah Montalbano. A great article by Sarah showing that Evergy ditched the wind and solar now that the subsidies are gone. Make sure to subscribe to Montalbano Mondays!
Where are the rigs? by Gabriel Collins. Very interesting piece by Gabe. Prices are up, why aren’t U.S. drilling rigs? Make sure to subscribe to Elemental Macro!
Top 10 Reasons Why Communities Are Fighting Data Centers by Robert Bryce. Oh, how we miss the Substack leaderboard and the good-natured ribbing we would give Robert when, on the rare occasion, our articles were beating his. Robert does a good job of describing the rural tepidness toward big tech.
As much as I appreciate your write-ups and information, they do get me angry about the absolute waste that has occurred. And I wonder, now that the IPCC has admitted they lied about the catastrophic future if CO2 keeps rising, will states end these mandates? I fear too many politicians still make too much money from them for that to happen
What I usually see when politicians become involved in telling businesses how to operate is that the politicians will usually focus on only one factor; in this example, the residential customer's bill. There is no attempt to understand any of the elements that go into the customer's cost on their bill. So we get to hear the jawboning about the customer's bill being too high, without an understanding of what the components of their rate base are. And this is after those same politicians forced the utility companies to install new facilities, like those related to the Green New Scam (carbon-free energy).
As we know, most politicians have very limited knowledge of high-school-level economics. But they do have knowledge of how to scare voters while promoting insane ideologies.