January 6th, 2013
Fun stuff happening at the Federal Energy Regulatory Commission. Remember the outrageous rates that FERC approved for CapX 2020 and PSEG’s Susquehanna-Roseland, over 12% rate of return on equity in this day of 3.25% prime rate? Environment Northeast is taking this issue to FERC, and have filed a Complaint and are requesting that the rate on equity (ROE) allowed be lowered:
Read this Complaint! It’s very clear about why:
Based on economic data and Dr. Woolridge’s DCF [Discounted Cash Flow Model] analysis, the current base ROE [Return on Equity] of 11.14% is excessive. In light of changed economic conditions and his DCF analysis, Dr. Woolridge concludes that the just and reasonable base ROE for the NETOs [New England Transmission Owners] is 8.7%.
Complaint Ex. C-1, p. 2 of 42. Here’s Exhibit C-107, p. 2 of 2, Panel A, showing Moody’s Long-Term Public Utility Bond Yields — can you see why utilities are so fond of the FERC Return on Equity Orders? This is not rocket science:
An interesting exhibit, well, ALL of them are interesting, but check Exhibit C-110, statistics for their “Electric Proxy Group” which includes some of our nearest and dearest utilities (click on charts for larger view):
And this one, also from Exhibit C-110, addressing comparative risk metrics for their group of utilities with the “Electric Proxy Group” which, again, includes some of our local utilities (note Xcel’s ratings of B++, And ALLETE/Minnesota Power’s A):
And 10 year US Treasury Yields:
FERC has issued Notice, which sets out how you can participate, including filing requirements and process:
Initial comments, protests and interventions are due January 16, 2013. Use FERC’s eFiling HERE!
If you are unable to file electronically (but it pays to figure it out and eliminate hard copies!), send to:
FERC 888 1st St. NE Washington, DC 20426