Tyson Slocum of Public Citizen has expressed apprehension about Goldman Sachs (NYSE:GS)' venture into the retail electricity industry, which is known for its deceptive practices. The Wall Street bank plans to offer retail electricity contracts to U.S. households, a move that has raised questions about potential market manipulation, corporate influence, and consumer abuse.
Slocum's concerns stem from Goldman Sachs' control over GenOn's fossil fuel power plants and partnership with Rhythm Energy, a Texas-based retail electric provider planning to expand its business. This move is facilitated through West Street Capital Partners, a private equity firm that recently requested permission from the Federal Energy Regulatory Commission (FERC) to represent Rhythm Energy.
The public advocate points out connections between Goldman Sachs, West Street Capital Partners, and Rhythm Energy, despite attempts to segregate banks from nonbank businesses. He also implicates the Federal Reserve in its oversight role as Goldman Sachs controls this private equity firm and has been granted control over GenOn's fleet of fossil fuel power plants by FERC. Other entities involved include Avenue Capital Group, Prudential Financial (NYSE:PRU), Graham Goldsmith's Cross Ocean, and Trident (LON:TRR) Capital managed by Stone Point Capital.
Slocum further disclosed a "rent-a-director" scheme involving shell companies and warned about potential consumer abuse when control over wholesale markets aligns with retail contracts. He argues that Goldman Sachs is leveraging its sizable financial power trading business buoyed by control over generation to profit from selling retail electricity to households.
The National Consumer Law Center and the Massachusetts attorney general have previously highlighted the sector's predatory practices. This has led advocacy groups like Public Citizen to call on the Federal Trade Commission to enhance protections against misleading claims associated with home energy products.
These developments come amidst growing concerns about greenwashing and deceptive practices in the energy sector. As Wall Street banks venture into new industries, issues of corporate influence, ethical boundaries, potential federal law conflicts, and market manipulation become increasingly pertinent.
InvestingPro Insights
Goldman Sachs (GS) is a prominent player in the Capital Markets industry and has been consistently profitable over the last twelve months, according to InvestingPro's real-time data. The firm's aggressive share buyback strategy and the maintenance of its dividend payments for 25 consecutive years are testament to its financial health and commitment to shareholders.
InvestingPro data also reveals that GS has a market capitalization of $113.62B and a P/E ratio of 15.75, which is lower than the industry average, indicating that the company could be undervalued. Furthermore, the company's liquid assets exceed its short-term obligations, which indicates a strong liquidity position.
However, it's worth noting that despite these strengths, GS has been experiencing a declining trend in earnings per share, and 12 analysts have revised their earnings downwards for the upcoming period. This could be due to the company's venture into the retail electricity industry, which is known for its deceptive practices and potential for market manipulation.
For more detailed insights and tips, consider exploring InvestingPro's platform, which contains an additional 5 tips on GS.
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