Goldman Sachs Dives into U.S. Homes through Texas Energy Investment Amid Controversies

Goldman Sachs, after abandoning a consumer banking venture in late 2022, is set to expand its reach into American homes through an investment in Rhythm Energy, a Houston-based electricity provider. The move comes as the Goldman Sachs private equity fund that oversees Rhythm Energy receives approval from federal authorities to extend its operations beyond Texas into more than a dozen states where deregulated power firms operate.

Covering energy networks, predominantly in the Northeast, Rhythm Energy aims to provide electricity to approximately 190 million Americans, marking Goldman Sachs' significant foray into the essential services sector. However, the endeavor has sparked concerns given the history of consumer abuses within the energy industry.

The 1990s wave of energy deregulation led to allegations of deceptive practices by some retailers, costing customers an estimated $19.2 billion more than necessary over a decade. Rhythm Energy positions itself as an ethical player in the field, contrasting itself with competitors by avoiding hidden fees and teaser rates, but its Texas customers paid, on average, five cents per kilowatt hour more than those with regulated providers in 2022.

Goldman Sachs' involvement in the energy sector through Rhythm Energy raises questions about potential conflicts of interest, given the bank's trading arm dealing in energy contracts and owning fossil fuel generators along the Northeast corridor. Critics express concerns about the influence Goldman Sachs could wield over retail sales, energy generation, and power contracts, potentially leading to abuses.

Rhythm Energy, labeled the largest independent green energy provider in Texas, operates autonomously from West Street Capital Partners, the Goldman Sachs private equity fund listed as an owner. Despite assurances of strict information barriers, the relationship between Goldman Sachs and Rhythm Energy, including a Goldman Sachs director on Rhythm's board, draws attention.

Goldman Sachs, emphasizing its commitment to profitability, faces scrutiny over its involvement in an industry previously criticized for consumer exploitation. The move aligns with Goldman Sachs' shift towards its asset management division, as CEO David Solomon positions it as the "growth engine" following setbacks in the consumer banking sector.