Lowering Utility Bills Act
- Sponsor
- Rep. Casar, Greg [D-TX-35]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Apr 29, 2026
Bottom line
This bill aims to lower utility bills for consumers by capping utility profits (return on equity) at the lowest reasonable rate and preventing the recovery of specific non-operational costs through customer rates.
What it actually does
The bill amends the Federal Power Act and the Public Utility Regulatory Policies Act of 1978 to mandate that federal and state regulators, when setting or calculating the return on equity for investor-owned electric and gas utilities and transmission providers, must use the lowest return within an established "range of reasonableness." This range is determined by averaging 10-year equity market returns from financial academics, institutions, and Global Systemically Important Banks, with specific downward adjustments for reduced utility risks. Additionally, it prohibits utilities from recovering certain "corrupt" costs, such as lobbying, political contributions, and certain executive expenses, through customer rates. The bill also repeals Section 219 of the Federal Power Act, which provided incentives for transmission infrastructure.
Proponents argue
Proponents argue that utilities, as regulated monopolies, face lower risks than competitive businesses and should therefore not be allowed to earn excessive profits at the expense of ratepayers. They contend that current regulatory practices often allow utilities to recover inappropriate costs, such as lobbying and executive perks, from customers, leading to inflated bills. By setting the return on equity at the lowest reasonable point and banning certain cost recoveries, the bill would ensure fairer rates, protect consumers from undue financial burdens, and incentivize cost-saving investments.
Opponents contend
Opponents might argue that forcing utilities to accept the lowest possible return on equity could deter necessary capital investment in critical infrastructure, including grid modernization and renewable energy projects. They may contend that a lower return on equity could make it harder for utilities to attract investors, potentially leading to financial instability or a decline in service quality. Furthermore, they might argue that some of the banned costs, such as certain advocacy efforts, are legitimate business expenses necessary for navigating complex regulatory environments and ensuring reliable service.
The bill is moderately complex due to its technical financial and regulatory language, requiring careful reading to understand its full implications.
Section 2(a), inserting FPA Section 206A(a)
Mandated Lowest Return on Equity for Transmission Providers
This provision requires the Federal Energy Regulatory Commission (FERC) to establish a "range of reasonableness" for the return on equity (ROE) for transmission providers. This range is based on the average of 10-year total or large-cap U.S. equity market returns estimated by financial academics, institutions, and Global Systemically Important Banks over the previous five years. FERC must then adjust this range downwards to account for reduced risks, such as not participating in regional planning or receiving federal loans/guarantees. Crucially, FERC must set the authorized ROE at the lowest point within this adjusted range, unless the transmission provider provides clear and convincing evidence that a higher ROE is needed to attract capital and maintain financial integrity.
Supporters argue
Supporters argue that transmission providers, as regulated entities with guaranteed cost recovery, face significantly lower investment risks compared to competitive market participants. Therefore, their return on equity should reflect this reduced risk, preventing them from over-earning at consumer expense. Setting the ROE at the lowest reasonable point ensures that consumers benefit from the utilities' stable financial position.
Critics contend
Opponents might contend that a rigidly low return on equity could disincentivize investment in critical transmission infrastructure, which is essential for grid reliability and the integration of new energy sources. They may argue that a higher ROE is necessary to attract the substantial capital required for large-scale, long-term transmission projects, especially given inflationary pressures and rising interest rates.
Tradeoffs
The tension lies between ensuring fair rates for consumers and providing sufficient financial incentives for utilities to invest in and maintain reliable infrastructure. A lower ROE could reduce consumer costs but might also slow down necessary grid modernization and expansion.
Section 2(a), inserting FPA Section 206A(b)
Prohibition on Recovering Non-Operational Costs from Customers for Transmission Providers
This section prohibits transmission providers from recovering a wide range of direct or indirect costs through customer rates. These banned costs include membership dues to 501(c)(6) organizations, lobbying and legislative action expenses (including influencing public opinion on regulations or elections), most advertising/marketing not explicitly approved by regulators, travel/lodging/food for board members/officers, entertainment/gifts, private aircraft use for executives, investor relations, costs associated with rate proceedings, contributions to 501(c)(3) or (4) organizations, political contributions, costs for unregulated products/services, and penalties/fines.
Section 2(a), inserting FPA Section 206A(c)
Prudence Requirement for Transmission Capital Expenditures
This provision states that FERC shall consider a capital expenditure by a transmission provider for a transmission project prudent only if the transmission provider provides substantial evidence that it prioritized grid-enhancing technologies (GETs) and other lower-cost alternatives in its planning process. Additionally, the transmission project must have been subject to a regional planning process that FERC determines complies with its applicable orders.
Section 2(b)
Repeal of Transmission Infrastructure Investment Incentives
This section repeals Section 219 of the Federal Power Act, which authorized FERC to provide incentive-based rate treatments for transmission infrastructure investment. These incentives included higher returns on equity, recovery of prudently incurred costs, and other mechanisms designed to encourage investment in transmission.
Section 3(a), inserting PURPA Section 610(a)
Mandated Lowest Return on Equity for Investor-Owned Utilities
This provision requires investor-owned electric and gas utilities (covered utilities) to calculate their return on equity (ROE) for official business (reports, financial disclosures, rate applications) using the lowest point within an established "range of reasonableness." Similar to transmission providers, this range is derived from 10-year equity market returns from financial academics, institutions, and Global Systemically Important Banks. The range must be adjusted downwards by 5 basis points for each applicable risk-reducing factor, such as operating as a regulated monopoly, formula rates, regulatory asset approval, or recovery of customer bad debt. While states can request or require alternative rate schedules, the utility must publicly justify any higher ROE used, explain the difference, and quantify the impact on revenue requirements and average residential monthly bills.
Section 3(a), inserting PURPA Section 610(b)
Prohibition on Recovering Non-Operational Costs from Customers for Investor-Owned Utilities
This section mirrors the ban for transmission providers, prohibiting investor-owned electric and gas utilities from recovering a similar broad range of direct or indirect costs through customer rates. These include membership dues to 501(c)(6) organizations, lobbying and legislative action expenses, most advertising/marketing not explicitly approved by state regulators, travel/lodging/food for board members/officers, entertainment/gifts, private aircraft use for executives, investor relations, costs associated with rate proceedings (before state or federal authorities), contributions to 501(c)(3) or (4) organizations, political contributions, costs for unregulated products/services, penalties/fines, and payments to outside attorneys/experts in Commission proceedings.
This clause mandates a specific downward adjustment of 5 basis points for each of seven identified risk-reducing factors that apply to a covered utility when establishing its range of reasonableness for return on equity. These factors include operating as a regulated monopoly, formula rates, regulatory asset approval, operating cost riders, bad debt recovery, securitization, and any other measure reducing competitive market risks.
Section 3(a), inserting PURPA Section 610(a)(1)(C)(ii)
Why it matters:This level of detail is common in legislative drafting for technical calculations, but its specific numerical impact might be overlooked by a casual reader focusing on the broader policy.
Case for: Proponents would argue this specific adjustment quantifies the reduced risk utilities face due to their regulated status and various state-approved mechanisms, ensuring that the return on equity accurately reflects their lower risk profile and prevents over-earning at consumer expense.
Case against: Opponents might argue that a fixed 5 basis point reduction per factor is an arbitrary and overly rigid approach that may not accurately reflect the actual risk reduction or the specific circumstances of individual utilities. This could lead to an unfairly low ROE, hindering investment.
Estimated impact: This provision could significantly reduce the authorized ROE for many utilities, potentially by 35 basis points (7 factors * 5 bps) or more, leading to substantial savings for ratepayers over time.
A violation of the requirements for investor-owned utilities (PURPA Section 610) shall be treated as a violation of a provision of part II of the Federal Power Act and enforced in accordance with section 316A of such Act. Section 316A of the FPA grants FERC authority to assess civil penalties for violations of FPA Part II, rules, regulations, or orders.
Section 3(a), inserting PURPA Section 610(c)
Why it matters:Standard legislative practice to leverage existing enforcement frameworks rather than creating new ones.
Case for: Proponents would argue that leveraging existing, robust enforcement mechanisms ensures that the new requirements for investor-owned utilities are taken seriously and that non-compliance can be effectively penalized, thereby protecting consumers.
Case against: Opponents might argue that applying FPA enforcement mechanisms to PURPA violations, particularly those related to state-level rate setting, represents an overreach of federal authority into state regulatory matters.
Estimated impact: Provides strong enforcement teeth to the new PURPA requirements, potentially leading to significant civil penalties for non-compliant utilities.