Commissioner Mark C. Christie Statement
March 29, 2022
Docket No. ER22-910-000
I concur with setting the matter for hearing for determination of factual issues. I write separately regarding the 50-basis point adder to return on equity (“ROE”) for RTO membership requested by the transmission owner.
On April 15, 2021, in a bipartisan vote, I joined two of my colleagues to propose capping ROE adders for RTO membership at three years following joining.[1] No final action has been taken in that proceeding.
To reiterate the essential point I made more extensively in my concurrence at that time, an ROE should reflect the market cost of equity capital, no more and no less, to the best of the regulator’s ability to determine, including pricing in risk. This standard is in accordance with utility regulatory principles dating back decades and is also consistent with the landmark Supreme Court cases of Bluefield[2] and Hope.[3]
An ROE adder, by definition, awards the utility more than the market cost of equity capital. An ROE adder is literally an involuntary gift from consumers to a monopoly provider.[4] While I recognize that ROE adders for RTO membership reflect current Commission policy dating back several years, it is my hope we will finalize our proceeding initiated last year. This is particularly salient at a time when transmission charges are among the fastest growing components of consumers’ bills.
For these reasons, I respectfully concur.
[1] Electric Transmission Incentives Policy Under Section 219 of the Federal Power Act, Supplemental Notice of Proposed Rulemaking, 175 FERC ¶ 61,035 (2021) (Christie, Commr, concurring) (Supplemental NOPR). I note that this Supplemental NOPR modified a March 20, 2020 NOPR issued in that docket. Electric Transmission Incentives Policy Under Section 219 of the Federal Power Act, Notice of Proposed Rulemaking, 170 FERC ¶ 61,204, errata notice, 171 FERC ¶ 61,072 (2020).
[2] Bluefield Water Works v. Public Service Commission of West Virginia, 262 U.S. 679 (1923).
[3] FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944).
[4] I will not herein debate whether transmission is or can be competitive, or rather is the classic natural monopoly and should be regulated as such.