Dive Brief:
- Connecticut’s attorney general and other state agencies on Thursday asked the Federal Energy Regulatory Commission to eliminate a 0.5% return on equity adder that Eversource Energy and Avangrid utilities in the state receive on their transmission asset investments for being part of ISO New England.
- A 2025 law requires Connecticut Light & Power and The United Illuminating Co. to participate in ISO-NE, making them ineligible for the extra ROE, which applies to voluntary participation in a regional transmission organization, according to the complaint.
- Transmission investments are a key to lowering customer costs by enabling access to additional sources of power generation, according to Eversource. “Our ongoing, strategic investments in the transmission system have helped to eliminate substantial congestion costs, providing customers with billions of dollars in savings over the past several years,” Sarah Paduano, a utility spokesperson, said in an email. Eversource expects that removing the RTO adder will save an average residential customer about 9 cents a month.
Dive Insight:
FERC offers utilities a suite of benefits aimed at boosting transmission development, including an extra 0.5% transmission ROE for utilities that voluntarily participate in an independent system operator, such as ISO-NE.
Ratepayer advocates, former FERC Chairman Mark Christie and others have sought to reign in those benefits, some of which can add to ratepayer costs.
States such as California, Ohio and, most recently, Maryland require transmission owners to join an RTO or ISO, making them ineligible for the so-called RTO adder.
In a key court case, a federal appeals court in January 2025 ordered FERC to strip utilities in Ohio of the ROE adder. At the time, the Office of the Ohio Consumers’ Counsel said it expected the ruling would save American Electric Power customers $220 million through 2031, while FirstEnergy and Duke customers would save $126 million and $99 million, respectively, in the same period.
Connecticut ratepayers could also see savings if FERC accepts the complaint from the AG’s office, the Connecticut Department of Energy and Environmental Protection, the Connecticut Office of Consumer Counsel and the Connecticut Public Utilities Regulatory Authority.
In 2024, the RTO adder increased CL&P and IU rates by $17 million across New England, with Connecticut ratepayers paying nearly $4.5 million of the total, according to the complaint.
“Worse, the adder imposes a substantial, incremental charge on electric transmission rates that already represent some of the highest in the nation,” the Connecticut agencies and AG’s office said.
In January, Connecticut ratepayers had the seventh-highest rates among U.S. states, with transmission charges making up about 15% of a typical residential customer’s monthly bill, according to the complaint.
The AG’s office and state agencies asked FERC to order refunds for the ROE order from the date of the complaint.
“This filing demonstrates our administration’s commitment to reducing costs for ratepayers,” Connecticut Gov. Ned Lamont, D, said in a press release. “Utilities with record profits should not receive bonus profits for doing something they are required to do by law. This is another way we’re addressing the issue of high electric bills in our state and ensuring utilities are not able to take advantage of ratepayers.”
Avangrid didn’t respond to requests for comment.
