{"title":"FERC’s theory of anomalous capital markets","authors":"Lon L. Peters","doi":"10.1016/j.tej.2024.107394","DOIUrl":null,"url":null,"abstract":"<div><p>In 2014, FERC adopted a new theory of capital markets for the purpose of setting authorized returns-on-equity: that all observed dividends and interest rates were anomalous and therefore unreliable indicators of the returns necessary for investors to hold the stocks and bonds of transmission owners. The new theory, used to justify higher authorized ROEs, rejected evidence of fundamental conditions in capital markets and explicitly adopted arguments by investor-owned utilities regarding unreliable markets. After a judicial remand, FERC abandoned the new theory, but consumers in New England and the Midwest were arbitrarily charged hundreds of millions of dollars over several years due to unjust and unreasonable rates for transmission service.</p></div>","PeriodicalId":35642,"journal":{"name":"Electricity Journal","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2024-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Electricity Journal","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1040619024000290","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"Social Sciences","Score":null,"Total":0}
引用次数: 0
Abstract
In 2014, FERC adopted a new theory of capital markets for the purpose of setting authorized returns-on-equity: that all observed dividends and interest rates were anomalous and therefore unreliable indicators of the returns necessary for investors to hold the stocks and bonds of transmission owners. The new theory, used to justify higher authorized ROEs, rejected evidence of fundamental conditions in capital markets and explicitly adopted arguments by investor-owned utilities regarding unreliable markets. After a judicial remand, FERC abandoned the new theory, but consumers in New England and the Midwest were arbitrarily charged hundreds of millions of dollars over several years due to unjust and unreasonable rates for transmission service.
Electricity JournalBusiness, Management and Accounting-Business and International Management
CiteScore
5.80
自引率
0.00%
发文量
95
审稿时长
31 days
期刊介绍：
The Electricity Journal is the leading journal in electric power policy. The journal deals primarily with fuel diversity and the energy mix needed for optimal energy market performance, and therefore covers the full spectrum of energy, from coal, nuclear, natural gas and oil, to renewable energy sources including hydro, solar, geothermal and wind power. Recently, the journal has been publishing in emerging areas including energy storage, microgrid strategies, dynamic pricing, cyber security, climate change, cap and trade, distributed generation, net metering, transmission and generation market dynamics. The Electricity Journal aims to bring together the most thoughtful and influential thinkers globally from across industry, practitioners, government, policymakers and academia. The Editorial Advisory Board is comprised of electric industry thought leaders who have served as regulators, consultants, litigators, and market advocates. Their collective experience helps ensure that the most relevant and thought-provoking issues are presented to our readers, and helps navigate the emerging shape and design of the electricity/energy industry.
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