New England States Urge FERC to Advance $1.5B in Ratepayer Refunds

Why It Matters

The ruling will shape utility financing costs and set a precedent for how regulators can enforce retroactive ROE adjustments, directly affecting ratepayer bills and the credit health of major New England utilities.

Key Takeaways

• Governors push FERC to deny utilities' stay request.
• $1.5 billion refunds target overcharged transmission earnings since 2011.
• FERC cut ROE to 9.57%, down from 10.57%.
• Utilities warn refunds could trigger credit downgrades and higher borrowing costs.
• Deadline set for May 20 2027; utilities sought extension to Dec 2027.

Pulse Analysis

FERC’s March 19 decision to slash the base return on equity for New England transmission owners to 9.57%—a full percentage point below the prior 10.57%—has reignited a decade‑long debate over utility earnings and ratepayer fairness. The agency’s retroactive application to earnings dating back to 2011 uncovered more than $1 billion in excess returns, prompting a court‑ordered refund of roughly $1.5 billion. While the utilities are not accused of misconduct, the agency concluded that the historic ROE was unsustainably high, triggering a cascade of financial adjustments across the region’s regulated utilities.

For Eversource and Avangrid, the mandated refunds translate into immediate balance‑sheet strain. The utilities warn that the accelerated liability could trigger credit‑rating downgrades, inflate borrowing costs, and force equity dilution at a time when capital markets remain cautious about regulated‑utility debt. Such financial pressure may also delay or curtail planned infrastructure upgrades, including critical transmission projects that support renewable integration. The utilities’ emergency petition to the D.C. Circuit Court seeks a stay, arguing that the refunds would cause irreversible harm to their financing structures and long‑term investment capacity.

State leaders and the New England Conference of Public Utilities Commissioners have rallied behind ratepayers, emphasizing that delaying refunds would exacerbate affordability challenges for households already burdened by high electricity prices. By urging FERC to dismiss the stay request, they aim to secure timely relief and reinforce regulatory accountability. The outcome will signal how aggressively regulators can enforce retroactive earnings adjustments, influencing future utility‑rate cases nationwide and shaping the financial landscape for transmission owners across the United States.