WASHINGTON, D.C. – In October, a private equity fund owned and controlled by Goldman Sachs applied to the Federal Energy Regulatory Commission to sell electricity on behalf of its affiliate Rhythm Energy, making the banking giant the first Wall Street bank to sell retail electricity contracts to households. Linked here is a blog post detailing Goldman’s efforts.
“Competitive retail electricity suppliers solicit households to sign contracts to provide electricity, often door-to-door,” said Tyson Solcum, director of Public Citizen’s energy program. “The industry is known to frequently employ unfair and deceptive marketing and sales tactics, disproportionately impacting low-income communities, communities of color and the elderly. It is highly concerning to see a large Wall Street bank enter a market known for its lack of consumer protection.”
According to a recent report, retail energy companies cost families over $19 billion in higher utility bills from 2010 through 2019.
Key to Goldman’s ability to make money from selling retail electricity to households is having a sizable financial power trading business buoyed by control over generation. On October 24, FERC approved allowing Goldman Sachs to control GenOn’s fleet of fossil fuel power plants out of bankruptcy.
“Controlling both energy generation and building out a network of households that are contractually obligated to buy your energy is ripe for consumer abuse,” said Slocum. “Lawmakers have attempted to build a firewall between banks owning and controlling non-bank businesses. While Goldman is playing a game with shell corporations, there are very clear connections between Goldman Sachs, private equity firm West Street Capital Partners, and Rhythm Energy.”
Goldman Sachs’ entry into the retail energy market comes as the company is seeking to streamline and downsize its retail banking business. The bank recently largely abandoned its Marcus retail banking to focus on the higher returns of focusing on wealthy clients, and executives are looking to exit its ill-fated retail credit card partnership with Apple.
In a short essay outlining the implications of the filing before FERC, Slocum further details the application from Goldman Sachs’ West Street Capital Partners to begin sales of energy contracts to households by Rhythm Energy.
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