November 30, 2022
Earlier this week, Utah Attorney General Sean D. Reyes led a coalition of 13 attorneys general by filing a motion to intervene, asking FERC (Federal Energy Regulatory Commission) to hold a hearing about Vanguard’s request for blanket authorization to buy significant amounts of shares of publicly listed utility companies. Attorney General Reyes is asking FERC for a hearing to examine Vanguard’s promises to FERC not to control utilities or impact electricity prices because those promises contradict Vanguard’s ESG (Environmental Social Governance) commitments to use its $8.5 trillion financial influence to pressure utility companies to eliminate fossil fuels.
“Vanguard is speaking out of both sides of its mouth—telling FERC it is just a passive investor in utilities but at the same time committing to use its trillions to pressure companies away from fossil fuels,” said Attorney General Reyes. “FERC should ensure that Vanguard’s activism will not lead to electricity price hikes and grid instability.”
FERC regularly reviews such applications, which it can either approve or deny. States say the hearing is necessary to determine whether electricity consumers and other ratepayers would be at risk of higher rates and reduced reliability of electricity supply if the purchases are approved.
In 2019, Vanguard persuaded the Commission that its transactions would not affect rates, competition, and regulation. That included “day-to-day management or operations of any traded utility nor invest for the purpose of managing, controlling or entering into business transactions with portfolio companies.”
Recently, however, Vanguard has made public statements indicating it would “accelerate the transition toward global net zero emissions,” by shifting electricity production completely away from natural gas and coal, which is now 67% of the global source. It has also worked on influencing ESG corporate policies with other major financial institutions such as BlackRock.
The letter states: “By making net zero commitments, Vanguard necessarily abandoned its status as a passive investor in public utilities and adopted a motive consistent with managing the utility. These commitments, on their face, further suggest that Vanguard has already undertaken and is currently undertaking corresponding activities that may constitute attempts to manage utilities—the precise actions Vanguard represented in its 2019 application and its pending application that it would not take.”
In addition to Utah, Indiana, Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, Ohio, South Carolina, South Dakota and Texas also joined the motion.