Cutting Utility Returns Would Backfire, Ex-EEI Exec Warns
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- Scott Aaronson, former Edison Electric Institute SVP of 17 years, argues that proposals to slash utility returns on equity would raise — not lower — electricity bills over the long term.
- US electricity demand is entering its steepest sustained growth since the Eisenhower years, driven by AI/data centers, reshored advanced manufacturing, electrified transportation, and broader electrification of the economy.
- The regulated utility model uniquely lets companies raise enormous long-lived capital while subjecting every dollar of spending to regulatory review for prudence, reliability, and cost.
- Slashing returns on equity below a "just and reasonable" level would raise borrowing costs and inflate customer bills for decades, since investors demand more compensation for higher risk — "capital is not free."
- Bipartisan consensus holds that more grid investment is needed — to harden against hurricanes and wildfires, defend against cyberattacks, expand transmission for redundancy, and clear years-long interconnection queues.
- The regulated model can ring-fence costs of large new loads like hyperscalers so households in Cleveland or Charlotte don't subsidize them, and steer federal cost-share toward transmission of national significance.
- Recent FERC "show cause" orders correctly assign cost-allocation oversight to state regulators, Aaronson writes.
Why it matters: Cutting utility returns to score short-term affordability wins would raise — not lower — the cost of capital for the grid buildout that must happen anyway, leaving low- and middle-income residential customers to absorb higher borrowing costs for decades. With US electricity demand set for its steepest sustained growth since the Eisenhower era, weakening the only model capable of financing the next fifty years of grid investment is the worst possible timing.
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