In Docket No. ER18-1639, FERC applied the revised ROE methodology from Opinion 569 et. seq. and determined the just and reasonable ROE for a single utility, Mystic Generation in New England, by using the average of: (1) the median result of the DCF model; (2) the median result of the CAPM; and (3) the point estimate of the Risk Premium. FERC found that the just and reasonable base ROE for the Mystic Agreement is 9.33%. The Mystic Agreement is a cost-of-service agreement between Mystic and ISO-NE to provide for continued operation of units 8 and 9 through June 2022. FERC found the Mystic facility to be of average risk. The median DCF ROE estimate is 8.12%, the median CAPM ROE estimate is 10.01%, and the Risk Premium point estimate is 9.85%. The average of those values is 9.33%.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.