Federal agency rejects rate proposal covering $3 billion of transmission projects, agreeing with OPC’s protest
BALTIMORE – The Federal Energy Regulatory Commission this week agreed with the Office of People’s Counsel’s challenge to the rates proposed to cover $3 billion in transmission investments for projects spanning 417 miles through Virginia, Maryland, and West Virginia. The federal agency agreed that Valley Link—a joint venture involving several major utilities—failed to demonstrate that its proposed rates and rate structure complies with federal law.
In filings on April 4 and May 1, 2025, OPC objected to Valley Link’s proposed “return on equity”—a component of utility rates that provides for the utility’s financial return for investors—along with its proposed allocation of equity and debt, known as its capital structure. A utility’s return on equity and capital structure substantially impact utility profits and what customers pay in their rates. In its order, FERC agreed with OPC that Valley Link had not justified either its proposed return or its capital structure and, per its usual process, set the matter for hearing and settlement proceedings.
“FERC’s action will help address the bill increases customers are seeing from the costs of massive transmission spending,” Maryland People’s Counsel David S. Lapp said. “We consistently see utilities earning excessive returns for their investors in rates set by state and federal regulators. The success here is an important step toward protecting customers from those inflated costs.”
OPC’s filings also challenged, unsuccessfully, Valley Link’s proposal for several types of “incentives.” The incentives include allowing Valley Link to collect costs from customers during the construction phase, giving it “abandoned plant” cost recovery even if the transmission projects are never completed, and providing Valley Link an “adder” to its return on equity to reward it for its participation in PJM, the regional transmission planning organization.
OPC argued the incentives are unnecessary and contrary to customer interests. Among other points, OPC explained that Valley Link is a joint venture of major utilities, including FirstEnergy, American Electric Power, and Dominion Energy. Those companies are already PJM members, and Valley Link will have no employees of its own but will use the employees of its owners, making the incentive “adder” for PJM membership inappropriate.
In his partial dissent that quoted from OPC’s filings, FERC Chair Mark C. Christie objected to all the incentives, stating that “it is long past time for this Commission to do its job of protecting consumers by cutting back on its unfair practice of handing out ‘FERC candy’ without any serious consideration of the impact on consumers already struggling to pay monthly power bills.”
The Valley Link transmission projects primarily run through Virginia and West Virginia, ending in Maryland, southwest of Frederick. They are part of PJM’s approximately $6 billion transmission expansion plan for 2024. OPC separately has filed comments objecting to PJM’s unfair allocation of the costs—driven almost entirely by data centers in Virginia—that would have Maryland customers paying for nearly $800 million of the transmission expansion.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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