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UI warns FERC ROE refunds could produce large, uncertain effects on rates
Summary
United Illuminating told PURA that FERC Opinion 594 could create large retroactive refunds for transmission but the amount due to UI is uncertain, timing is unclear and much of any refund would flow to the New England region rather than directly to UI customers; UI recommended against a premature RAM adjustment because the refund is not 'known and measurable.'
During Phase Two questioning, staff asked how FERC Opinion 594 (changing base ROE retroactively) might affect UI customers. UI witnesses said the decision could imply very large numbers for the region'a publicly cited $1.5 billion figure'but stressed significant uncertainty about the share that would be owed by or to UI, the year-by-year breakdown, and the timing because of appellate filings and court stays.
UI told the Authority it does not currently view the potential refunds as "known and measurable" and therefore did not propose a RAM adjustment on that basis. Company witnesses explained that much of any region-wide refund would go to the regional transmission owner pool, not directly to UI customers, and that the mechanics of payment (whether a dollar refund or rate change) will materially affect how collections and credits flow through the RAM and other tariffs.
UI recommended waiting for clearer calculations and possible court developments before attempting to smooth the effects into current rates; staff acknowledged the difficulty but asked whether the company could model scenarios for future RAM proceedings. UI said it plans to address the issue further in upcoming filings when more information is public and calculable.
Why it matters: a multi-year, retroactive ROE change could produce substantial cash flows that would alter transmission revenue allocations and reduce costs for distribution customers if and when the amounts are known. Regulators must balance smoothing near-term bills against the risk of under-or-overrecovering if refunds do not occur as assumed.
