Dive Brief:
- New England governors and utility regulators are urging the Federal Energy Regulatory Commission to dismiss a request from Eversource and Avangrid to let the region’s utilities delay refunding about $1.5 billion to ratepayers until litigation is settled over how much return on equity they should be allowed to earn on their transmission assets.
- Since the first complaint over the utilities’ transmission ROE was filed in 2011, the utilities overcharged ratepayers by more than $1 billion, while households face electricity affordability challenges, according to a Friday filing by the New England Conference of Public Utilities Commissioners. “Granting a stay would only compound this harm by further delaying urgently needed relief to the consumers who have borne these unjustified costs for more than a decade,” the group told FERC.
- FERC has already extended a 30-day deadline for the utilities to finish making the refunds to May 20, 2027. The transmission owners and ISO New England had asked for an extension to Dec. 17, 2027.
Dive Insight:
The dispute centers on FERC’s March 19 decision to retroactively cut the base return on equity it gives to transmission owners in New England to 9.57% from 10.57% following 15 years of litigation.
Eversource and Avangrid were particularly hard hit by FERC’s decision to order refunds for what the agency determined to be excessive returns going back to 2011. The utilities are not accused of wrongdoing; rather, FERC concluded the previous ROE had become too high.
Eversource’s utilities — Connecticut Light and Power, NSTAR Electric and Public Service Co. of New Hampshire — owe about $880 million in refunds, and Avangrid’s New England utilities — Central Maine Power Co. and The United Illuminating Co. — owe about $203 million, the companies said earlier this month when they asked FERC to stay the decision.
In an emergency petition, the utility companies on April 14 asked the U.S. Court of Appeals for the District of Columbia Circuit to stay FERC’s ROE decision while the dispute is reviewed.
Without a stay, FERC’s decision will cause irreparable harm to the Eversource and Avangrid utilities, according to the petition.
FERC’s order “compels the indicated [New England transmission owners] to raise and carry massive, unplanned financial liabilities on an accelerated timeline that is incompatible with the realities of regulated-utility finance,” they told the court.
The refund obligation severely degrades the utilities’ credit metrics, increases their borrowing costs, makes it harder to access capital and forces them to issue debt or equity under distressed conditions, the utility companies said.
“Once incurred, these harms are irreversible: Credit downgrades cannot be undone, financing costs cannot be recovered, equity dilution cannot be reversed, and deferred or foregone infrastructure investment cannot be retroactively created,” they said.
Also, extending the deadline to pay the refunds doesn’t ease those harms, according to Eversource and Avangrid.
The companies said they would likely win a lawsuit seeking to overturn FERC’s decision because the agency allegedly ignored limits imposed by Section 206 of the Federal Power Act and relied on an “extra-statutory policy” to “backdate” its decision to 2014.
Before filing a lawsuit to overturn FERC’s decision, parties must ask the agency to reconsider its decision. Parties have 30 days to file those requests after FERC issues a decision. FERC has 30 days to respond to rehearing requests and then parties have 60 days to appeal the agency’s decision.
