Eversource Energy and Avangrid have asked FERC to pause refund obligations stemming from the commission’s recent order cutting the return on equity for New England transmission owners and requiring the companies to issue extensive refunds (EL11-66, et al.).

The order on March 19 reduced the TOs’ base ROE from 10.57% to 9.57%. It set an Oct. 16, 2014, effective date, which coincides with the previous effective date for the 10.57% base ROE overturned by the D.C. Circuit Court of Appeals. FERC also required the TOs to issue refunds for a 15-month period following the date of the original 2011 petition that triggered the ongoing regulatory proceeding. (See FERC Cuts ‘Ping-ponging’ ROE for New England Transmission Owners.)

In a filing submitted April 2, Eversource and Avangrid estimated that the regionwide refund obligations would total about $1.5 billion, including interest.

“The magnitude of the required refunds is astonishing,” they wrote.

They estimated that the refund obligations would total about $880 million for Eversource and about $203 million for Avangrid. The companies are the two largest TOs by mileage in the region and also own the two largest distribution networks.

They argued that the refund requirements would “cause immediate and irreparable harm” to themselves, their investors and energy consumers. The obligations would hurt the companies’ financial liquidity, cost of capital and stock prices, and would lead to “operational instability, including risks to system planning and investment if funds must be diverted abruptly to pay refunds,” the companies wrote.

Eversource CFO John Moreira said the refund obligation “requires utilities to raise and carry a massive, unplanned financial liability and fundamentally disrupts liquidity, credit metrics, capital planning and investor confidence.”

“Higher borrowing costs and constrained access to capital increase the long-term cost of service and place upward pressure on customer rates,” he said.

The companies argued that processing the refunds while regulatory and legal challenges are underway would create risks of volatility on customers’ electric bills.

“Rather than providing durable customer benefits, immediate refunds followed by later recovery would subject customers to fluctuating charges that are difficult to predict, budget for or understand,” they wrote.

In contrast, state officials and consumer advocates applauded FERC’s ruling as a win for customers.

“This decision makes clear that utilities should not be allowed to make exorbitant profits on the backs of ratepayers, and that those profits should go back in people’s pockets where it belongs,” Massachusetts Gov. Maura Healey (D) said.

The state estimated the refunds would return about $900 million to New England ratepayers.

Massachusetts Attorney General Andrea Joy Campbell said the decision “reflects years of work to challenge excessive transmission profits and deliver meaningful relief.”

Tina Bennett, CEO of PowerOptions, a nonprofit energy-buying consortium, said FERC’s decision to cut the ROE “confirms what we argued all along — that regulated returns must track actual financial conditions, not outdated assumptions.”

While the utilities may appeal, “the broader outcome is clear: ratepayers are better protected,” she said.

Extension Request

In a separate filing on April 2, the New England transmission owners and ISO-NE asked FERC for an extension to the time allowed to complete the refunds.

The commission’s order included just a 30-day period to complete the refunds. The TOs and ISO-NE asked FERC to extend the refund deadline until Dec. 13, 2027, and the deadline for the refund report until Feb. 1, 2028.

They argued that the complicated nature of calculating and issuing the extensive refunds makes the 30-day timeline infeasible.

“The refunds must be processed on three tracks: regional, Schedule 12C and local rates,” they noted. “Each track involves different billing entities, sequencing requirements and reconciliation steps, further compounding the complexity of implementing refunds over such an extended historical period.”

Debbie DiFiore of ISO-NE said in an affidavit that “the proposed refund schedule represents the fastest timeline under which ISO-NE can calculate and administer the refunds, provided that the [New England TOs] submit the necessary information in a timely manner and in the agreed-upon format.”