On March 19, 2026, in Opinion No. 594, the Federal Energy Regulatory Commission ("FERC") found that New England Transmission Owners' ("NETO") previously effective base return on equity ("ROE") of 11.14% was unjust and unreasonable and determined that it needed to be replaced with a base ROE of 9.57%.1 Eversource Energy estimates that the refunds associated with this decision are $1.5 billion for all of the NETO entities.2 This large amount represents a financial hurdle for the NETOs to manage, but also shows the extent to which New England ratepayers have been impacted for over a decade.
Below, we provide a brief overview of the long-running saga leading to Opinion No. 594, and our more detailed review, identifying nuances and insights found within the 304-page decision, is available upon request.
Overview — the Twists and Turns Leading to Opinion No. 594
This decision arrived 15 years after the first of four complaints was filed against NETO's 11.14% base ROE in September 2011. As part of the long-running saga, FERC issued Opinion No. 531 in June 2014 and later Opinion No. 531-A in October 2014 and determined that 10.57% was the appropriate base ROE for NETO.3 The 10.57% base ROE has been charged by NETO since October 2014.
These opinions reflected an important methodological change in how FERC assessed and determined ROEs for electric utilities, with FERC moving from a one-step form of the discounted cash flow ("DCF") model to a two-step DCF model that now included both short-term and long-term growth rates. Additionally, the 10.57% base ROE was based on the midpoint of the upper half of the zone of reasonableness to account for what it characterized as anomalous market conditions.
However, it didn't end there, because in 2017, following petitions to the D.C. Circuit Court, the court remanded Opinion Nos. 531 and in response, FERC issued a briefing order in 2018 that proposed a new four-model methodology.4 At around the same time, FERC issued a similar briefing with the same proposed new methodology in relation to complaints filed against the base ROE of the Midcontinent Independent System Operator transmission owners ("MISO TO").5
Subsequently, as part of the MISO TO complaint proceeding, FERC adopted a new methodological framework for determining ROEs in the Opinion Nos. 569 series of decisions across the 2019 and 2020 years.6 Once more, as part of the case history, the D.C. Circuit Court also remanded these decisions, and the FERC issued a subsequent order on remand in the year 2024, which was not changed in a 2025 order addressing rehearing requests.7 The base ROE determined in that last decision of 9.98% was based on the two-step DCF and Capital Asset Pricing Model ("CAPM").
FERC Preferred ROE Models — Key Characteristics
Two-Step DCF
Components:
Short-Term Growth Rate @ 80% Weight
Long-Term Growth Rate @ 20% Weight
Dividend Yield Adjusted by Short-Term Growth Rate
CAPM
Components:
Market Return Calc. Using One-Step DCF of S&P 500 Index
Beta sourced from Bloomberg
Risk Free Rate based on 30-Year Treasury Yield
Turning back to Opinion No. 594 for the NETO, FERC employed the same methodological framework adopted in the MISO TO Opinion Nos. 569 decisions to arrive at its decision of 9.57% base ROE. The 9.57% base ROE was calculated using financial data from the six-month study period of October 2012 – March 2013, which pertained to the first complaint proceeding. The results of analysis are:
Zone of Reasonableness — Opinion No. 594
Range from lower bound to upper bound, with midpoint marked. Study period: Oct 2012 – Mar 2013.
FERC also ordered refunds for the 15-month period associated with the first complaint, and for the period from October 16, 2014, through the date that Opinion No. 594 was issued. Thus, the first refund component is based on the difference between the 11.14% base ROE and the 9.57% base ROE, and the second component is based on the difference between the 10.57% base ROE and the 9.57% base ROE.
The Case Timeline - Key Items
Initial Complaints Filed
First complaint against NETO's 11.14% base ROE initiates the 15-year proceeding.
Opinion No. 531 Issued
FERC adopts two-step DCF methodology and establishes 10.57% base ROE for NETO.
Opinion No. 531-A
Follow-up opinion confirms 10.57% base ROE.
D.C. Circuit Remand
Court remands Opinion Nos. 531 and 531-A.
FERC Briefing Order — NETO
FERC proposes new four-model methodology in response to court remand; same process initiated for MISO TO.
Opinion No. 569 Series — MISO
FERC issues Opinion Nos. 569, 569-A, and 569-B establishing new two-model ROE framework for MISO Transmission Owners.
D.C. Circuit Remand (MISO)
Court remands MISO decisions; FERC directed to reconsider ROE methodology on remand.
MISO Remand Order
FERC issues order on remand determining 9.98% base ROE for MISO Transmission Owners using refined methodology.
Opinion No. 594 — NETO
FERC applies same settled methodology from MISO remand decision, establishing 9.57% base ROE for NETO; refunds estimated at $1.5B.
We can reasonably expect that Opinion No. 594 will be appealed at the court, and this may not be the last of the matter. Additionally, the NETO have indicated that they are considering making a Section 205 filing for a new base ROE based on current capital market conditions.8
The NewGen cost of capital team stands ready to advise and work with you to achieve just and reasonable ROEs.
Want the Full Analysis?
Our detailed review identifies nuances and insights from the 304-page decision — including proxy group selection, natural break analysis, beta methodology, and the Commission's treatment of the Risk Premium method.
Request the Full Report →Footnotes
1 Opinion No. 594, 194 FERC ¶ 61,208.
2 Martha Coakley, Attorney General of the Commonwealth of Massachusetts, et al., Docket Nos. EL11-66-001 et al. Motion of Central Maine Power Company et al. for a Stay of Retroactive Refund Obligations, and Request for Shortened Comment Period and Expedited Consideration, April 2, 2026.
3 Opinion No. 531, 147 FERC ¶ 61,234 (2014), Opinion No. 531-A, 149 FERC ¶ 61,032 (2014), Opinion No. 531-B, 150 FERC ¶ 61,165 (2015).
4 NETO Briefing Order, 165 FERC ¶ 61,030 (2018).
5 MISO Briefing Order 165 FERC ¶ 61,118 (2018).
6 Opinion No. 569, 169 FERC ¶ 61,129 (2019), Opinion No. 569-A, 171 FERC ¶ 61,154, Opinion No. 569-B, 173 FERC ¶ 61,159 (2020).
7 MISO Transmission Owners, et al., v. FERC, 45 F.4th 248 (D.C. Cir. 2022), MISO Order on Remand, 189 FERC ¶ 61,036 (2024) ("MISO Remand Order"), 190 FERC ¶ 61,184 (2025).
8 Eversource Energy, Form 8-K, filed on March 31, 2026.
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