(The Center Square) — A bipartisan group of New England governors is calling on federal regulators to reject a proposal by several regional utilities to boost their profit margins and delay ratepayer refunds.
In a letter to the Federal Energy Regulatory Commission, Connecticut Gov. Ned Lamont and five other chief executives call on the agency to reject a proposal by regional power transmission companies to “significantly” increase the amount of money they are allowed to keep as profits from monthly utility bills.
The leaders, including Democratic Maine Gov. Janet Mills and Republican New Hampshire Gov. Kelly Ayotte, criticized a proposal by Eversource, Avangrid, and other New England transmission owners to increase their base return on equity to 11.39% from 9.57%, set only a few months earlier by the agency.
“We fear this unreasonable increase in transmission rates will needlessly burden the region’s households and businesses, impair our economic competitiveness, and undermine our efforts to deploy transmission investment that is needed to maintain reliability, improve affordability, and access additional electricity supplies,” the governors wrote to FERC.
In March, FERC cut the base to 9.57% from 10.57% after holding that the companies had overcharged consumers for years. The agency ordered the companies refund to ratepayers $1.5 billion by next year. Eversource and Avangrid have filed a legal challenge to overturn FERC’s decision. They are also seeking to delay the refunds.
In a joint filing to regulators, the companies said they need the additional revenue to make investments that help keep costs down and improve the reliability of the regional power grid. They’ve also pointed to state climate change regulations across the region that have driven up costs.
“Growing demand, evolving generation patterns, and heightened reliability and resilience requirements underscore the essential public interest served by sustained transmission investment,” they wrote.
“The ability to undertake this level of investment depends directly on access to capital on reasonable terms, which in turn depends on a regulatory framework that provides for an allowed ROE that adequately reflects current risks and capital market conditions.”
Besides rejecting the current proposal at its next meeting, the governors called on FERC to scrutinize future requests from utilities for a higher rate of return. They urged regulators to “carefully balance and reflect current financial market conditions, regional economic realities, and the overarching need to protect ratepayers from unjustified cost increases.”
The request to hold onto more money to make the improvements comes as energy costs are skyrocketing in the New England region, which already has some of the highest costs in the nation.
“Authorizing this rate increase would place further undue strain on ratepayers already struggling to pay their electricity bills and undermine investments that could deliver relief to the region,” they wrote. “Every dollar that goes to transmission companies should support the development of cost-effective infrastructure, not excess returns to investors.”
