New England Transmission Owners Ask FERC for Increased ROE

Why It Matters

The ROE determines utilities' cost of capital, shaping both infrastructure investment and ratepayer electricity bills, so the decision will directly impact New England’s grid modernization and consumer costs. The clash also underscores growing regulatory tension between utilities seeking higher returns and policymakers aiming to curb rising transmission charges.

Key Takeaways

• FERC set New England transmission ROE at 9.57% in March.
• Eversource, Avangrid request 11.39% ROE effective June 30.
• Utilities say 0.1% ROE change alters earnings by $7 million annually.
• State officials and consumer advocates oppose the ROE increase.
• Proposed ROE faces limited support from ISO New England committees.

Pulse Analysis

The Federal Energy Regulatory Commission (FERC) has long been the arbiter of utility earnings through its return on equity (ROE) methodology. In March, after 15 years of litigation, FERC retroactively lowered the base ROE for New England transmission owners from 10.57% to 9.57%, citing financial data from 2012‑13. This decision forced utilities to refund roughly $1.5 billion to ratepayers by 2027, intensifying scrutiny of how capital costs are allocated across the region’s aging grid infrastructure.

Eversource, Avangrid, and other transmission owners contend that the outdated metrics ignore present‑day risk factors such as the Iran‑related geopolitical climate and ongoing supply‑chain constraints. Their filing proposes an 11.39% ROE, arguing that a modest 0.1‑point increase translates to about $7 million in after‑tax earnings for Eversource alone. By tying the ROE to current market conditions, the utilities aim to secure more favorable financing terms, which they say are essential for meeting growing demand, evolving generation patterns, and heightened reliability standards.

State leaders and consumer advocates, however, view the request as a direct threat to affordability. Massachusetts Governor Maura Healey and the state’s attorney general warned that higher transmission rates would exacerbate already rising electricity bills. With only 20‑25% support from ISO New England committees and vocal opposition from the Maine Office of Public Advocate, the proposal faces a steep political headwind. The outcome will shape not only the pace of transmission upgrades but also the broader debate over balancing utility profitability with consumer protection in the evolving energy landscape.