FERC Denied Rehearing on the New England ROE Cut, and the Refunds Start Arriving This Month

FERC has declined to reconsider the decision that cut New England transmission owners’ base return on equity from 11.14 percent to 9.57 percent. The March 19 ruling stands, and with it a refund obligation running back to October 2011.

The refunds began flowing in September 2026. ISO New England and the transmission owners agreed to a schedule under which each successive month of settlement covers roughly one additional year of the refund period. Preliminary estimates of the total range from about $900 million to $1.5 billion. No party has published a final figure, because the arithmetic depends on recalculating fifteen years of regional transmission billing.

The mechanism. A base return on equity is the profit margin a regulated transmission owner is permitted to earn on the capital it has sunk into wires, substations and the rest of the regional network. That margin is not a separate line on anyone’s bill. It is embedded inside the revenue requirement that becomes the regional transmission rate, which is then billed to load-serving entities on a dollar-per-kilowatt basis tied to coincident peak demand. Lower the authorized return, and every kilowatt of billed peak demand carries slightly less cost. Raise it, and the reverse happens.

That is why a rehearing denial in a fifteen-year-old rate case is not a purely legal story. The New England commercial customer who pays a demand charge is paying, among other things, for the transmission owners’ cost of capital. A 157-basis-point reduction moves the per-kilowatt figure downward on a forward basis, and a decade and a half of accumulated overcollection moves backward as credits.

Who receives the money. Consumer advocates, including the Connecticut Office of Consumer Counsel, have treated the outcome as a win, and in the narrow sense of dollars returned it is one. The refunds land with the entities that were billed at the wholesale level, which is to say the load-serving utilities, not directly with the buildings that ultimately funded the overcollection. What reaches a commercial tenant or owner depends on how each state’s retail delivery rates pass the regional transmission charge through, a step that state commissions rather than FERC control.

The forward effect on demand charges. For a facility manager in Eversource or National Grid territory, the practical consequence is twofold and pulls in opposite directions. The transmission component of the regional demand charge is worth marginally less per kilowatt than it was before March, which trims the value of any strategy built on shaving coincident peaks. At the same time, refund credits appearing on bills now are the kind of anomaly that prompts a finance department to read the delivery section of an invoice for the first time in years.

The second effect is the more consequential one for anyone selling load management. Regional Network Service is billed on coincident peak, and it remains the line item most responsive to deliberate load reduction. The ROE decision changes the price of that line. It does not change the fact that it is the line a building can act on.

The precedent risk. A return on equity set through litigation is not permanent. The methodology FERC applied in the New England case is the same family of analysis it applies elsewhere, and the parties who lost have every incentive to test it further. The MISO transmission owners pursued a parallel challenge to a comparable refund order and did not prevail in June. That outcome makes the New England figure more durable than it would otherwise be, but it does not make it fixed. Any underwriting model that treats 9.57 percent as a permanent input is assuming more finality than a rate case of this length supports.

The rest of the regional stack. The ROE reduction arrives alongside other pressures on the same bill. ISO-NE’s forward capacity market is being reworked under the Capacity Auction Reform package, and FERC Order 2023 interconnection procedures are reshaping how new storage enters the region. Developers speaking at ISO-NE’s Consumer Liaison Group in late September described improving battery technology and widening arbitrage spreads meeting regulatory friction on both fronts. Those are front-of-meter concerns and do not reach the retail demand-charge stack directly, but they share a common denominator: the cost of regional transmission and capacity is being relitigated on several tracks at once, and the net direction is not obvious from any single docket.

What is settled and what is not. Settled: the 9.57 percent base return, the March order, the rehearing denial, the September start of refund distribution, and the approximate scale of the total. Unsettled: the precise total, the pass-through treatment in each of the six New England states, and whether further judicial review disturbs the number.

For commercial buildings, the operative question is narrower than the docket. The regional network charge is assessed on a monthly coincident peak. A building that reduces demand during that hour reduces the quantity being billed. The ROE ruling adjusts the price attached to that quantity by a modest amount. It does not alter the structure, which is the part that determines whether peak management is worth doing at all.

The refunds will continue arriving on a rolling basis, each month reaching further back. The forward rate is now set at 9.57 percent until someone persuades FERC or a court otherwise.

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