The report, titled Ratemaking for a Reliable Grid, examines the complex mechanics of utility financing to challenge the assumption that return on equity (ROE) is a primary driver of rising consumer bills. Data from 69 electric utility rate cases since 2020 reveals that authorized ROEs increased in only 29 percent of instances, contradicting the perception of systematic upward movement. Benjamin Dierker, the report’s coauthor, warns that policymakers often reduce complex financial systems to simplistic slogans, which may lead to blunt reforms that weaken long-term grid reliability.

Regulated utilities operate under a framework designed to balance customer protection with financial integrity, but the report cautions that fixed caps could prove counterproductive. Because utilities rely on both debt and equity to fund infrastructure, restricting the equity portion—which is not a guaranteed profit but an opportunity to earn—may increase borrowing costs. As states like Pennsylvania and Connecticut grapple with the energy demands of data centers, the authors argue that the focus should shift toward transparent cost allocation and tailored tariffs rather than rigid formulas that ignore the risk-bearing nature of capital investment.