Press Release  Federal Judge Orders New England Transmission Companies to Lower Rates

Boston — A federal judge has ruled that New England electric transmission companies should refund customers $234 million after agreeing that the amount companies charge ratepayers for their infrastructure investments is too high, Attorney General Maura Healey announced today.

The decision by Administrative Law Judge Steve L. Sterner would reduce the return on equity (ROE) transmission companies are permitted to earn on their investments during 2013 through 2015.  The judge’s decision is the result of ongoing litigation before the Federal Energy Regulatory Commission (FERC) initiated by the AG’s Office in 2011. FERC must still approve the judge’s decision.

“As the ratepayer advocate, we are pleased that the administrative law judge agrees that the profits electric transmission companies and their investors are earning at the expense of ratepayers is too high,” said AG Healey. “If FERC agrees, New England ratepayers will be refunded hundreds of millions of dollars and will save millions more going forward.”

Transmission companies are allowed to recover transmission line construction costs plus a profit. In October 2014, based on the initial complaint filed in 2011 by the AG’s Office and others, FERC reduced the transmission owners’ allowed profits or ROE from 11.14 percent to 10.57 percent. That order resulted in a one-time refund to New England customers of $78 million.

Judge Sterner’s decision further reduces the allowed ROE to 9.59 percent for rates that were in effect between January 2013 and April 2014. If FERC affirms Judge Sterner’s decision, New England customers will receive a refund of approximately $234 million. Massachusetts ratepayers, which pay for nearly half of the New England region’s transmission costs, will be refunded approximately $106 million.

Judge Sterner also found that the ROE in effect from July 2014 through October 2015 should have been no higher than 10.9 percent. While this rate is lower than the 11.14 percent that was charged to ratepayers, the AG’s Office will recommend that FERC further reduce this rate.

Joining in the complaints and pursuing refunds for customers were the Massachusetts Department of Public Utilities (DPU), the 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 Attorney General’s Office of Ratepayer Advocacy is by statute the ratepayer advocate for Massachusetts and is authorized to intervene in or institute administrative and judicial proceedings on behalf of customers in connection with any matter involving the rates, charges, prices or tariffs of any gas or electric company doing business in the state.

This case is being handled by Assistant Attorney General Rebecca L. Tepper, Chief of AG Healey’s Energy and Telecommunications Division, and Assistant Attorney General Donald W. Boecke, also of the AG’s Energy and Telecommunications Division, along with assistance from the Connecticut Public Utilities Regulatory Authority, the Connecticut Office of the Consumer Counsel and the Connecticut Attorney General’s Office.

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