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Attorney General William Tong

07/02/2020

Attorney General Tong Leads Coalition Urging FERC to Curb Needless Incentives For Transmission Developers

Transmission Accounts for 20 Percent of New England Ratepayer Costs

(Hartford, CT) – Attorney General William Tong this week led a coalition of attorneys general, the Connecticut Department of Energy and Environmental Protection, the Office of Consumer Counsel and the Maine Ratepayer Advocate urging the Federal Energy Regulatory Commission to reject unnecessary and unjust incentive payments to transmission developers.

FERC issued a draft rulemaking in March proposing a series of generous new transmission incentives, including extra payments for basic measures that transmission developers are already doing, such as joining mandatory regional transmission organizations. With a federally regulated transmission system already weighted toward traditional, carbon-intensive and outdated energy transmission methods, the coalition argues that any new incentives must be targeted to encourage the development of modern, zero-carbon renewable resources.

The coalition agreed with FERC Commissioner Richard Glick, who stated in his dissent: “Incentives must actually incentivize something. A payment that does not incentivize anything is a handout, not an incentive. Handing out customers’ money to transmission owners without a strong belief that that money will induce beneficial conduct is unjust and unreasonable and inconsistent with the Congress.”

“Connecticut consumers already pay far too much for their energy. The last thing we need is to send more ratepayer dollars to transmission developers for lucrative work they were already planning to do. If we are going to consider any form of incentive, it should be to encourage the necessary transition away from fossil fuels, and towards carbon-zero renewables,” said Attorney General Tong.

“The Department strongly urges the Commission not to provide unjust and unnecessary incentives to transmission companies for projects they would build anyway,” DEEP Commissioner Katie Dykes said. “The Department strongly supports this effort to ensure that FERC requires grid planners and operators to evaluate transmission projects based on metrics that protect ratepayers and accommodate state public policies.”

“Under FERC’s proposed rulemaking, Connecticut ratepayer dollars would be given away to transmission developers with no customer benefit in return,” said Acting Consumer Counsel Richard E. Sobolewski. “Ratepayer funds should be prudently spent on improving the safety and reliability of the transmission system—not further enriching developers that stood to profit regardless. Connecticut ratepayers already face high electric rates—they rightfully expect to receive tangible outcomes from rates paid rather than watching those rates climb higher for no demonstrable purpose.”

Transmission costs have increased substantially over the last decade. Nationwide, investments in electric transmission facilities grew from approximately $2 billion per year during the late 1990s to approximately $20 billion per year during the five years ending in 2019.

In New England, these transmission costs account for almost 20 percent of ratepayer bills. Approximately $1.3 billion in transmission upgrades are planned for New England over the next several years. The base rate of return on equity for transmission developers on those projects is currently over 10 percent—a lucrative business hardly in need of additional incentives.

The letter was led by Attorney General Tong and signed by the Connecticut Department of Energy and Environmental Protection, the Office of Consumer Counsel, the Maine Ratepayer Advocate, and the attorneys general of Massachusetts, California, Illinois, Maryland, Michigan and Rhode Island.
Separately, the Connecticut Public Utilities Regulatory Authority also filed timely comments opposing the proposed transmission ROE incentives regime as a needlessly expensive solution in search of a problem.

Assistant attorneys general Robert Snook and Matt Levine, Head of the Environment Department, assisted the Attorney General in this matter.

Click here to view the letter.

Twitter: @AGWilliamTong
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Media Contact:

Elizabeth Benton
elizabeth.benton@ct.gov

Consumer Inquiries:

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