Christopher Hailstone brings decades of specialized knowledge to the table regarding the intricate mechanics of power grid reliability and the complex financial structures that govern our utilities. As an expert who has spent years dissecting the relationship between energy management and regional transmission, Christopher understands the delicate balance between incentivizing infrastructure growth and protecting the consumer’s wallet. In this discussion, we explore the intensifying regulatory battle in Connecticut, where state agencies are challenging the “RTO adder”—a financial bonus given to utilities for participating in regional networks. We delve into the implications of mandatory participation laws, the actual dollar impact on the average household, and how recent court rulings in other states are setting a precedent that could reshape the energy landscape across New England.
The 0.5% return on equity adder was originally designed as a carrot to encourage utilities to join regional transmission organizations, but it has recently become a major point of contention. From your perspective, why is this specific incentive now being viewed as an unnecessary burden on Connecticut ratepayers?
The tension we are seeing today stems from the fact that Connecticut residents are already grappling with some of the most expensive electricity in the country, currently ranking as the seventh-highest in terms of rates across the United States. This 0.5% adder might sound like a minor technicality, but it represents a “bonus profit” on top of the standard returns utilities receive for their transmission investments. When you consider that transmission charges already account for roughly 15% of a typical residential customer’s monthly bill, any additional percentage feels like a heavy weight on families trying to make ends meet. The argument from state agencies is that this incentive has lost its original purpose; it was meant to entice voluntary cooperation, but in an era of high costs, it is being scrutinized as an extra charge that adds millions to the collective bottom line of consumers without providing a new, tangible service.
A significant part of the legal challenge rests on a 2025 state law that makes participation in ISO New England mandatory for certain utilities. How does this shift from voluntary to required participation fundamentally change the justification for these financial incentives?
This is really the heart of the matter because the law has effectively removed the “choice” that the incentive was designed to influence. If Connecticut Light & Power and The United Illuminating Co. are legally required by the state to remain part of ISO New England, then the Federal Energy Regulatory Commission’s justification for a “voluntary participation” bonus simply vanishes. You cannot logically offer a financial reward to encourage a behavior that is already mandated by statute. We saw a very similar scenario play out in Ohio, where a federal appeals court in early 2025 ruled that utilities must be stripped of this ROE adder because their participation was no longer a choice. It creates a situation where ratepayers feel they are being charged for a “bonus” that the utility didn’t have to work to earn, which feels inherently unfair in a regulated market.
When we talk about the financial impact, the figures can seem disparate, ranging from millions of dollars in total costs to just a few cents on a monthly bill. How should a typical resident interpret the claim that removing this adder would only save them about 9 cents a month?
It is easy to look at 9 cents a month and dismiss it as insignificant, but that is a narrow way to view the broader economic picture of utility regulation. While 9 cents is the average projected savings for a single residential customer, those pennies aggregate into massive sums; in 2024 alone, this adder increased rates by a staggering $17 million across New England, with Connecticut ratepayers shouldering nearly $4.5 million of that total. For a state government, this isn’t just about one dime—it’s about the principle of “record profits” being padded by the hard-earned money of citizens who are already paying a premium for their power. When you add up these small, incremental charges across the entire utility bill, they contribute to the sticker shock people feel every time they open their mail, and state leaders like Governor Ned Lamont are signaling that every cent counts in the fight to lower the cost of living.
Eversource has defended their position by noting that strategic investments in transmission have actually saved customers billions of dollars by reducing congestion. How do you reconcile the need for high-level infrastructure investment with the push to cut these specific equity returns?
This highlights the eternal tug-of-war in energy policy: we absolutely need modern, robust transmission lines, like the 345-kV lines seen in Brookfield, to move power efficiently and keep the lights on. Eversource is correct that by eliminating congestion, they help avoid the massive costs that occur when power can’t get to where it’s needed, which has indeed saved billions over the last several years. However, the critics aren’t necessarily attacking the investments themselves; they are attacking the “extra” profit margin on top of those investments. The question isn’t whether we should build the grid, but whether utilities need a 0.5% “participation bonus” as an incentive to do the job they are already being paid to do. We have to find a way to reward innovation and reliability without allowing the rate base to become a bottomless well for supplemental utility profits.
Looking at the broader national trend, with states like California, Ohio, and Maryland taking similar stands, what does this move by Connecticut signal for the future of federal transmission incentives?
We are witnessing a significant shift in the regulatory climate where the “blank check” era of transmission incentives is being met with fierce resistance from state attorneys general and consumer advocates. Former FERC Chairman Mark Christie has been a vocal proponent of reigning in these benefits, and the 2025 court ruling in Ohio has provided a powerful legal roadmap for other states to follow. In Ohio, the removal of these adders is expected to save American Electric Power customers $220 million through 2031, while FirstEnergy and Duke customers are looking at savings of $126 million and $99 million respectively. Connecticut is now part of a growing coalition of states that are demanding a more transparent and conservative approach to how federal regulators allow utilities to collect money from the public, signaling that the days of automatic, uncontested ROE adders may be coming to an end.
What is your forecast for the evolution of utility rates and regulatory oversight in the New England region over the next decade?
I expect we will see a much more aggressive and granular level of oversight from state agencies who are no longer willing to take utility cost projections at face value. As the transition to renewable energy requires even more transmission infrastructure, the battle over who pays for it—and how much profit is “fair”—will only intensify. We will likely see more states passing laws that mandate RTO participation specifically to trigger the removal of these adders, effectively using state legislation to override federal incentive structures. Ultimately, the focus will shift toward a “performance-based” model where utilities are rewarded for measurable outcomes in reliability and carbon reduction, rather than receiving bonuses simply for being part of the regional club. The era of the “participation trophy” in the energy sector is fading, replaced by a demand for lean, efficient, and cost-justified operations.
