Judge Orders Electric Transmission Companies to Lower Rates
New England Consumers Could See $145 Million in Annual Transmission Rate Savings by 2017
BOSTON – A federal judge has ruled that electric transmission companies should lower their rates by an estimated $115 million a year after agreeing that the amount companies charge consumers for their infrastructure investments is too high, Attorney General Martha Coakley announced today.
The decision by Administrative Law Judge Michael J. Cianci, Jr. would reduce the return on equity (ROE) from 11.14 percent to 9.7 percent, and is the result of a landmark complaint filed with the Federal Energy Regulatory Commission (FERC) by AG Coakley’s Energy and Telecommunication Division. FERC must still approve the judge’s decision.
Because investments in transmission infrastructure and reliability are expected to continue to increase significantly over the next few years, overall savings for ratepayers in New England would likely grow to $145 million per year by 2017. In addition, the ROE would be decreased retroactively to 10.6 percent between October 2011 and December 31, 2012, which would result in a further reduction in consumers’ bills.
“This groundbreaking decision is a significant step toward bringing millions of dollars in relief to New England ratepayers who have been overcharged for years,” AG Coakley said. “Our office has long argued that current electric transmission rates are excessive and place too high a burden on businesses and families. This decision is a major victory for consumers across Massachusetts and New England.”
“This decision represents real, quantifiable savings for businesses in Massachusetts who are paying some of the highest rates in the United States,” said Robert Rio, senior vice president for Associated Industries of Massachusetts, a trade group representing businesses throughout the Commonwealth. “The Attorney General should be commended for her work looking out for ratepayers.”
Transmission companies are allowed to recover the costs to construct transmission lines plus a profit. The current allowed profit or ROE was set by FERC in 2006 at 11.14 percent, costing New England ratepayers $1.755 billion annually. Massachusetts ratepayers pay for nearly half of the region’s transmission costs.
Because economic conditions worsened, and the transmission companies were charging significantly more than required for other comparable companies, AG Coakley filed a complaint in 2011 with FERC to lower the allowed ROE.
Joining the complaint were the Massachusetts Department of Public Utilities (DPU), Massachusetts Municipal Wholesale Electric Company, the Connecticut Public Utilities Regulatory Authority, the Connecticut Office of Consumer Counsel, Connecticut Attorney General George Jepsen, and several other New England state regulators, ratepayer advocates, and industrial customer groups.
The respondents in the complaint are Bangor Hydro-Electric Company, Central Maine Power Company, New England Power Company d/b/a National Grid, New Hampshire Transmission LLC d/b/a NextEra, NSTAR Electric Company, Northeast Utilities Service Company, The United Illuminating Company, Unitil Energy Systems, Inc. and Fitchburg Gas and Electric Light Company, and Vermont Transco, LLC. Most of the named transmission companies are transmission affiliates of local electric distribution companies.
The Attorney General’s Office of Ratepayer Advocacy is by statute the utility ratepayer advocate for Massachusetts and is authorized to intervene in or institute administrative and judicial proceedings on behalf of consumers in connection with any matter involving the rates, charges, prices or tariffs of any gas or electric company doing business in the Commonwealth.
This case is being handled by Division Chief Jesse Reyes and Assistant Attorney General Patrick Tarmey of the AG’s Energy and Telecommunications Division, along with assistance from the Connecticut Public Utilities Regulatory Authority, Connecticut Attorney General’s Office, and the Connecticut Office of Consumer Counsel.