Legal Pathways to Lowering Transmission Costs in New England Through Public Transmission Financing

The report argues that substituting tax-exempt public debt for investor-owned utility (IOU) equity and taxable debt can significantly lower transmission costs for ratepayers in New England. It identifies two primary paths: strengthening existing quasi-public entities or creating a new purpose-built transmission authority. The author emphasizes that any such vehicle must have a clear statutory mandate for FERC-jurisdictional transmission, non-recourse revenue-bond authority, the ability to form public-private partnerships, and governance structures that ensure state accountability and risk control.

• Public financing can lower transmission costs by replacing high-cost IOU equity and taxable debt with lower-cost, tax-exempt public debt. A stylized example shows that a $1 billion project financed by an IOU at a 7.5% weighted average cost of capital (WACC) costs $3.18 billion over 40 years, whereas the same project financed with public revenue bonds at 4.5% costs $2.17 billion, representing nominal savings of approximately $1 billion.
• Analysis suggests that public or public-private financing could reduce the cost of new transmission in New England by up to 43%, potentially saving ratepayers $8.4 billion for projects needed for carbon-reduction goals. Additionally, it could reduce the cost of asset condition projects by up to 34%, saving $1.1 billion on currently forecasted projects.
• New England utilities have historically favored small, local projects over large regional ones to maximize profits and minimize regulatory risk. Between 2002 and 2023, utilities spent roughly $11.9 billion to $13 billion on reliability-focused transmission upgrades, with asset condition projects (replacements and refurbishments) becoming the primary driver of spending.
• The report identifies two plausible paths for implementing public transmission financing in New England: strengthening existing authorities (such as MMWEC, MassDevelopment, or RIIB) or creating a new, purpose-built transmission authority or financing agency.
• Existing New England entities like the Massachusetts Municipal Wholesale Electric Company (MMWEC) have some capacity to support transmission, but face political and governance hurdles. MMWEC's board is largely composed of municipal light department representatives whose incentives may not align with system-wide regional investments.
• Other New England entities, such as MassDevelopment and the Rhode Island Infrastructure Bank (RIIB), are currently constrained by mandates focused on in-state economic development or distribution-level infrastructure rather than FERC-jurisdictional, multi-state high-voltage transmission.
• Successful models in other states include New Mexico's Renewable Energy Transmission Authority (RETA) and Colorado's Electric Transmission Authority (CETA), both of which use non-recourse revenue bonds and public-private partnerships to develop high-voltage lines.
• The New York Power Authority (NYPA) demonstrates the use of a large public-power entity to issue highly rated (AA range) green transmission revenue bonds for projects like the Smart Path and Smart Path Connect, which are integrated into the NYISO tariff.
• California has implemented the California Transmission Accelerator Revolving Fund Program via SB 254, authorizing the California Infrastructure and Economic Development Bank (I-Bank) to provide financial assistance for CAISO-planned transmission projects through non-recourse bonds.
• Any viable New England transmission financing program must adhere to four principles: a clear statutory mandate for FERC-jurisdictional transmission (including out-of-state facilities), the power to enter public-private partnerships using revenue bonds, authorization to be an ISO-NE Participating Transmission Owner or contractual co-owner, and governance controls to represent state interests and manage risk.

APA

Macey, J. (2026). Legal Pathways to Lowering Transmission Costs in New England Through Public Transmission Financing. Clean Air Task Force. https://cdn.catf.us/wp-content/uploads/2026/05/18194155/legal-pathways-lowering-transmission-costs-new-england.pdf

Chicago

Macey, Joshua. Legal Pathways to Lowering Transmission Costs in New England Through Public Transmission Financing. Clean Air Task Force, 2026. https://cdn.catf.us/wp-content/uploads/2026/05/18194155/legal-pathways-lowering-transmission-costs-new-england.pdf.

Wikipedia

{{cite report |last1=Macey |first1=Joshua |title=Legal Pathways to Lowering Transmission Costs in New England Through Public Transmission Financing |publisher=Clean Air Task Force |date=May 2026 |url=https://cdn.catf.us/wp-content/uploads/2026/05/18194155/legal-pathways-lowering-transmission-costs-new-england.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{macey2026legal, author = {Macey, Joshua}, title = {{Legal Pathways to Lowering Transmission Costs in New England Through Public Transmission Financing}}, institution = {Clean Air Task Force}, year = {2026}, month = may, url = {https://cdn.catf.us/wp-content/uploads/2026/05/18194155/legal-pathways-lowering-transmission-costs-new-england.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }