New England Consumers Overcharged 'Millions' For Energy, States Say

With the cost of nearly everything going up, New England consumers may be delighted to hear that their electric bills should be going down.

Massachusetts Attorney General Martha Coakley has filed a complaint with the Federal Energy Regulatory Commission (FERC) seeking to lower the rates that transmission companies charge New England ratepayers by nearly $113 million.

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 current electric transmission rates are excessive and transmission companies are making unreasonable profits at the expense of ratepayers,” Coakley said. “Electric transmission companies in New England have enjoyed the benefits of higher returns that were set when economic conditions were much better. It is now time for the federal government to set rates at an appropriate level in order to give ratepayers relief from the current rates.”

11.14 percent return

Transmission companies are allowed to recover the costs to construct transmission lines plus a profit. The current allowed profit or return on equity for constructing transmission was set by FERC in 2006 at 11.14 percent.

Because economic conditions have worsened and since interest rates have declined, Coakley requests that FERC lower the return on equity to 9.2 percent.

“The lower rate would mean big savings in Connecticut, where electric rates are among the highest in the country,” Connecticut Attorney General George Jepsen said. “Approximately 26 percent of the total transmission costs in New England are paid by Connecticut ratepayers. Our savings alone would be $28 million in 2012, increasing to $51 million a year in just two years,” Jepsen said.

The states say the requested change would save New England ratepayers $108 million in 2012 rising to $196 million a year by 2014. FERC sets transmission rates for all New England electric customers in a regional rate case.