Trial staff at the Federal Energy Regulatory Commission has recommended approval of a settlement that would reduce transmission owner Niagara Mohawk Power’s return on equity to 10.03% from the current 11.5%.

Niagara Mohawk, a unit of National Grid, reached the agreement with the Municipal Electric Utilities Association of New York, the New York Association of Public Power and the Allegheny Electric Cooperative.

Under the agreement filed with FERC last month, the new rate would be backdated to Nov. 2, 2012, resulting in a refund of $3.16 million. (See Niagara Mohawk, Public Systems Reach ROE Settlement.)

“The public interest is well served by a negotiated compromise,” FERC staff wrote (EL12-101, EL13-16 and EL14-29).