Maryland Asks FERC to Cut 0.5% RTO Adder From Seven Transmission Owners, Saving Ratepayers $20 Million a Year
- FERC & Federal Policy & Markets Regulatory
Marin Holt
- 0
- 6 minutes read
- RTO adder targeted: 0.5% return on equity
- Annual ratepayer savings: More than $20 million
- Transmission owners named: Seven (Exelon, FirstEnergy, NextEra, Transource, Valley Link)
- Legal basis: Utility RELIEF Act, effective July 1, 2026
- FERC filing date: July 2, 2026
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The Maryland Public Service Commission and the state’s Office of People’s Counsel asked the Federal Energy Regulatory Commission on July 2, 2026, to strip a 0.5% return-on-equity bonus that seven transmission owners collect for belonging to the PJM Interconnection. Ending the incentive, known as the RTO adder, would cut more than $20 million a year from Maryland electricity bills, the agencies told FERC.
The complaint names Exelon’s Baltimore Gas and Electric, Delmarva Power and Light, and Potomac Electric Power Company; FirstEnergy’s Potomac Edison; NextEra Energy Transmission MidAtlantic; Transource Maryland; and Valley Link Transmission Maryland. Each earns the extra half-percent on equity for the transmission assets it operates inside PJM, and each files those returns into rates that Maryland households and businesses ultimately pay.
What Changed
The filing rests on the Utility RELIEF Act, a Maryland law that took effect July 1, 2026 and requires the state’s transmission-owning utilities to belong to a regional grid operator. FERC created the RTO adder years ago to reward utilities that voluntarily joined a regional transmission organization. Maryland’s position is that once membership is a legal mandate, the reward no longer buys the behavior it was meant to encourage.
When incentives cannot induce behavior because the behavior is mandated, the Commission has a longstanding policy that incentives may not be awarded.
Maryland complaint to FERC
Enforcement Reality
Maryland is not writing on a blank slate. FERC has already pulled the RTO adder in California and Ohio after those states made regional-operator membership mandatory, and the agencies cite that record as the template for their own request. Jefferies equity analysts told clients the Maryland complaint “will likely be successful given precedent.” A comparable 2024 dispute in New England shows the stakes: a single adder increase added $17 million to Connecticut Light and Power and United Illuminating rates, with Connecticut ratepayers carrying $4.5 million of it.
If FERC agrees, the seven owners lose the half-percent on their Maryland-allocated transmission equity going forward. The Commission sets no fixed deadline to rule on a complaint of this type, but the parties have already exchanged the opening round, and a decision would flow into transmission rates the utilities recover through PJM.
Critical Perspective
Maryland pegs the savings from stripping the 0.5% RTO adder at more than $20 million a year across the seven named transmission owners. The complaint does not dwell on how small that is against the roughly $6 billion PJM approved in its latest Regional Transmission Expansion Plan, most of it to serve the very data-center load pushing bills upward. FERC has already pulled the same adder from utilities in California and Ohio once those states mandated membership, while a 2024 New England fight showed how the same adder cuts both ways, adding $17 million to Connecticut Light and Power and United Illuminating rates when one increase went through. If every PJM state with a membership mandate files the identical complaint, does reclaiming a two-decade-old half-percent incentive change the transmission spending that is the real driver of Maryland’s rising bills?
Why It Matters
Maryland regulators are under pressure to hold down bills as data-center demand pushes transmission spending higher across PJM. The half-percent adder is one of the few bill items a state cuts without approving a new line, plant, or program (it is pure return, not construction), which is why regulators reach for it first. A win would also hand every other PJM state that mandates membership a ready-made argument to file the same complaint, putting a class of transmission incentives that has stood for two decades back in front of FERC.
Sources
- Utility Dive
- RTO Insider
- Maryland Office of People’s Counsel: FERC complaint
- Maryland Office of People’s Counsel: FERC and PJM Issues
