A federal judge ruled Tuesday that electric transmission companies in New England should receive less profit from its transmission line projects.
Connecticut, along with the rest of the New England states, challenged the “return on equity” that transmission owners, such as Northeast Utilities and United Illuminating, charge customers for their transmission facilities.
Administrative Law Judge Michael J. Cianci Jr. determined a rate of 9.7 percent profit going forward would be reasonable. The New England states challenged the 11.14 percent “return on equity” in September 2011. The states said a reasonable earnings rate would be 9.2 percent, but after years of arguments Cianci concluded 9.7 percent would be reasonable.
Attorney General George Jepsen, who represented Connecticut, applauded the decision. “Connecticut customers alone could save $30 million to $40 million annually in transmission charges,” he said.
The decision still has to be finalized by the Federal Energy Regulatory Commission.
Connecticut Consumer Counsel Elin Katz noted that “for years, New England utilities have been receiving exorbitant returns from customers for transmission lines. As anyone with a bank account knows, returns of over 11 percent are out-of-step with current financial conditions.”
But the utilities don’t agree. Instead, they cautioned that this is just the first step in the process.
“It’s important to note that this decision is just one part of a multi-step process,” Frank Poirot, a senior media specialist with Northeast Utilities, said. “This decision must still be reviewed by the FERC commissioners and a final order is likely to be issued in 2014.”
Transmission lines are more profitable for utility companies than the distribution projects that bring power to homes and businesses. The decision, if it’s upheld by the Federal Energy Regulatory Commission, could bring Connecticut one step closer to lowering its electric bills. Over the past few years, the distribution portion of consumers bills in Connecticut has dropped while transmission line costs have remained steady since 2006.
Connecticut customers pay about 25 percent of the region’s transmission costs.
“We have made significant investments in the region’s transmission system on behalf of our customers and are proud of our record. New transmission projects are critical when it comes to improving access to renewable energy sources both locally and regionally,” Poirot said. “We continue to believe that our ROE is reasonable and encourages investment in the region’s transmission infrastructure.”
Jack Betkoski, vice chairman of the Public Utility Regulatory Authority, disagreed.
“This action results from our strong and constant focus on doing everything possible to bring down electric rates for Connecticut residents and businesses,” he said. “All costs borne by ratepayers — be they transmission charges or funding for ISO-New England’s budget — must be carefully scrutinized and challenged when they are excessive.”
The decision also was applauded by Gov. Dannel P. Malloy, who believes lowering energy costs will improve the state’s business climate.
“Since taking office, we have made it a priority to bring cheaper, cleaner and more reliable energy to residents,” said Malloy. “I am proud to say that we have made progress, and are now the only New England state to see a significant drop in the cost of electricity.”