New England states urged the Federal Energy Regulatory Commission to approve a complaint that seeks to strip Maine’s transmission owners — including Avangrid’s Central Maine Power — of an extra 0.5% return on equity they earn for being a member of ISO New England, according to a Monday filing at FERC.
FERC gives transmission owners a 0.5% boost to their ROE as an incentive to voluntarily join a regional transmission organization or an independent system operator. However, the agency has denied the so-called RTO adder for utilities in California and Ohio, states that require their utilities to participate in their respective grid organizations.
Amid concerns about rising electric bills, Connecticut, Maine, Maryland and New Jersey this year passed laws requiring transmission owners to participate in their RTOs. So far, Connecticut, Maine and Maryland agencies have filed complaints at FERC asking it to bar their utilities from collecting the ROE incentive.
In their Sept. 1 complaint against ISO New England, CMP, Versant Power and Maine Electric Power Co., or MEPCO, the Maine Public Utilities Commission and other agencies said that in 2024 the CMP and Versant-related RTO participation adder increased charges to the New England region by about $6 million, with Maine ratepayers paying about $700,000.
“Worse, the adder imposes a substantial, incremental charge on electric transmission rates that already represent some of the highest in the nation,” the agencies said.
Federal appeals courts have consistently found that the incentives cannot induce behavior when that already is legally mandated by state law, said the New England States Committee on Electricity, which represents the region’s governors.
Besides granting the Maine complaint, FERC should adopt the agency’s proposal to limit the RTO adder to three years or eliminate it entirely, NESCOE said.
CMP and MEPCO blasted the complaint, which they said seeks to enforce an “unlawful state statute” that aims to interfere with FERC’s authority over interstate transmission rates.
“Permitting such state interference in independent system operator … or RTO formation and interstate transmission rates should not be countenanced,” the utilities said.
The utilities said that granting the complaint would violate their rights under the Federal Power Act’s section 205, which they contend include the right to form or withdraw from an ISO or RTO, and to change the rates and terms on file at FERC.
Granting the complaint would have wide-ranging consequences, including adding regulatory uncertainty when more transmission investment is needed, according to the Edison Electric Institute, a trade group for investor-owned utilities.
“Now is not the time to ratchet back policies designed to promote regional collaboration for the development of infrastructure needed to support energy dominance,” the trade group said.
Also, granting the complaint would ignore the benefits Maine has received from utility participation in ISO-NE and the “substantial” risks that being an ISO-NE member creates for transmission owners, EEI said.
“A fragmented approach to incentives where a utility’s access to incentives ebbs and flows based on one-off decisions made by the Commission that are driven by policies set by other entities raises implications that go beyond the four corners of this complaint,” the trade group said.
