Goldman Sachs’ electricity ambitions: a dangerous power play

As Goldman Sachs moves to sell retail electricity, advocates warn of potential exploitation and conflicts of interest, echoing concerns of unchecked Wall Street expansion.

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In a move that has raised eyebrows and concerns alike, Goldman Sachs is poised to become the first Wall Street bank to sell retail electricity contracts directly to U.S. households. This development, as argued by Tyson Slocum, director of the energy program at Public Citizen, is fraught with potential pitfalls and ethical quandaries.

Goldman Sachs’ foray into the retail energy sector is not just an isolated business venture; it represents a broader and perhaps more troubling trend. On October 24, the Federal Energy Regulatory Commission (FERC) granted Goldman Sachs control over GenOn’s fleet of fossil fuel power plants, emerging from bankruptcy. This control over generation is key to the bank’s strategy to make money from selling retail electricity.

The concerns articulated by Slocum and others stem from the nature of the competitive retail electricity industry itself. Characterized by aggressive marketing tactics, the industry has a track record of preying on vulnerable groups, including low-income communities, communities of color, and the elderly. Reports from the National Consumer Law Center and the Massachusetts attorney general point to a sector rife with greenwashing and deceptive practices, often resulting in higher utility bills for those least able to afford them.

Goldman Sachs seeks to enter this landscape through Rhythm Energy, a retail electric provider in Texas looking to expand its operations. The connections between Goldman Sachs, West Street Capital Partners (a private equity firm), and Rhythm Energy, however, raise red flags about potential conflicts with federal law.

Lawmakers have historically attempted to erect a firewall between banks and nonbank businesses, but the intricate web of shell corporations and “rent-a-director” schemes suggest an unsettling circumvention of these safeguards. The question, as Slocum aptly puts it, is why the Federal Reserve is allowing Goldman Sachs to venture into the business of marketing electricity to households.

The implications of a Wall Street giant controlling both energy generation and a network of household energy contracts are profound. It opens the door to potential consumer abuse and market manipulation, echoing the unchecked expansion of Wall Street firms into sectors with significant public impact.

Public Citizen, along with other advocacy groups, has called upon the Federal Trade Commission to enhance protections against misleading claims associated with home energy products. This plea for regulatory vigilance is particularly pertinent in light of Goldman Sachs’ ambitions.

As the nation grapples with energy challenges and transitions, the entry of Goldman Sachs into retail electricity sales raises essential questions about corporate influence, consumer protection, and the ethical boundaries of Wall Street’s reach. It is a development that warrants close scrutiny and robust debate, highlighting the need for stringent oversight in sectors that directly impact the daily lives of American families.

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