A federal administrative law judges has sided with Connecticut and the other New England states in lowering electric utilities’ transmission payments, which could save Connecticut ratepayers as much as $40 million annually.
Administrative Law Judge Michael Cianci ruled Tuesday that the return on equity for electric utilities was far too high, saying the power grid administrator should lower it by nearly 1.5 percent. The Federal Energy Regulatory Commission still must concur with Cianci before the new rate goes into effect. FREC’s ruling is expected in 2014.
Transmission lines carry electricity from power plants to utility’s local distribution systems, and companies such as Northeast Utilities or Hartford UIL Holdings of New Haven profit from the transmission infrastructure they have in place. The transmission charges in New England are broken down by state based on usage, so Connecticut ratepayers cover 25 percent of the region’s transmission costs.
“We continue to believe that our ROE is reasonable and encourages investment in the region’s transmission infrastructure,” said Frank Poirot, NU Transmission spokesman. “Our transmission investments have also saved customers over $1 billion in their bills by providing access to lower cost generation supplies.”
FERC had set the utilities’ return on equity at 11.14 percent. The New England states objected, saying that should be 9.2 percent, which is closer to what the utilities earn on their local distribution systems. In his ruling, Cianci determined a rate of 9.7 percent.
Transmission charges are a line item on ratepayers’ bills and are among the three highest charges on those bills, along with generation and distribution. Attorney General George Jepsen said the annually savings from the lower transmission rate is between $30-$40 million.
“We are hopeful that FERC in its final decision will consider the importance of encouraging investment in transmission infrastructure, especially as the nation strives for more extensive use of renewable energy, and needs transmission to move wind and solar generation from remote areas to where the energy is needed most,” Poirot said.
