On October 30, 2026, the Federal Energy Regulatory Commission sustained its order directing Duke Energy Ohio and American Transmission Systems, Inc. (ATSI) to remove a 50-basis-point adder to their authorized return on equity from their formula rates and to pay refunds back to February 24, 2022. The order, in Docket No. EL22-34-003, closes the last open chapter of a complaint the Office of the Ohio Consumers’ Counsel filed nearly five years ago — and it does so by holding a line FERC drew years earlier: an incentive meant to reward a voluntary choice cannot be paid for a choice the law already compels.
The sums at stake are not trivial, even though no dollar total for the refunds has yet been fixed in a compliance filing. Fifty basis points applied to a transmission rate base measured in billions produces real money, year after year, and the refund window here runs for more than four years, with interest. That is the arithmetic that made this case worth litigating to the Sixth Circuit and beyond.
What the adder was
The RTO adder dates to FERC Order No. 679, issued in 2006 under section 219 of the Federal Power Act. Congress, worried that transmission owners had little reason to hand operational control of their wires to a regional organization, directed FERC to offer incentives for joining one. FERC’s answer was a 50-basis-point bonus on the transmission owner’s authorized return on equity — the profit rate embedded in its transmission rates — for joining or continuing to participate in a regional transmission organization or independent system operator. For Duke and ATSI, the relevant organization is PJM Interconnection, the grid operator for Ohio and twelve other states plus the District of Columbia.
The logic of the bonus was straightforward, and it contained its own limit. An incentive exists to induce behavior: if a utility joins an RTO because it wants the bonus, the bonus has done its work. If a utility joins because state law leaves it no alternative, the bonus induces nothing — it is simply an extra half-point of return paid for compliance with the law. FERC’s position, crystallized in a 2021 determination, was that only utilities that voluntarily join an RTO are eligible. That single word, voluntary, is what the entire Ohio fight has been about.
It is worth pausing on the mechanics. The adder does not change how much transmission gets built, and it does not appear as a line item on a customer’s bill. It raises the allowed return inside the formula rate — the annually updated calculation that turns a transmission owner’s costs and rate base into the revenue requirement PJM collects from load-serving entities and, ultimately, from customers. Remove the adder and the formula rate falls by the value of half a point of return on the rate base: a small percentage of any single bill, a large aggregate sum across a system the size of Ohio’s.
Why Ohio membership is not voluntary
Ohio law requires an entity that owns or controls transmission facilities in the state to be a member of, and transfer control of those facilities to, a qualifying transmission entity that is operational. The Ohio Consumers’ Counsel built its February 24, 2022 complaint on that requirement, arguing that Duke, ATSI, and two American Electric Power subsidiaries — Ohio Power Company and AEP Ohio Transmission Company — were therefore ineligible for the adder because their PJM membership is not voluntary.
FERC’s first answer, in December 2022, was split. The commission granted the complaint in part as to the AEP subsidiaries, removing their adder, but declined to remove it for Duke and ATSI. The distinction FERC drew was procedural: the AEP adder had been granted in a stand-alone ruling under section 219, while the Duke and ATSI adders were embedded in comprehensive settlement agreements approved as whole packages. FERC’s position was that it does not revisit individual elements of a settlement unless the overall rate is shown to be unjust and unreasonable, and that it could not know what trade-offs had produced the settled rates.
The Sixth Circuit rejected that distinction. In a decision issued January 17, 2025, the court affirmed FERC’s denial of a new adder application from Dayton Power & Light (now AES Ohio) and affirmed the removal of AEP’s adder, but vacated the decision to leave Duke’s and ATSI’s adders in place. The court held that FERC’s differential treatment was arbitrary and capricious: all three utilities’ rates included a 50-basis-point adder, whether explicitly approved or impliedly included in settlements, and if the settled rates could be separated into a base return and the adder, the commission “must also remove the RTO adder for Duke and [ATSI].” The court also agreed with FERC’s reading of section 219 — that the statute is best read to require voluntary membership.
The utilities sought review in the Supreme Court, which declined to hear the petitions. That left the Sixth Circuit’s remand as the governing instruction, and FERC’s June 25, 2026 order on remand carried it out: removal of the adder effective December 15, 2022, with refunds, plus interest, from February 24, 2022 — the date the OCC filed its complaint — through the date the refunds are made.
The rehearing fight, and why the refund window survived
Duke and ATSI sought rehearing of the June 2026 order on July 27, 2026, and their arguments went to the money rather than the principle. Both argued that the Federal Power Act limits refunds to a 15-month period; Duke put the end of that period at May 24, 2023. Duke also argued that the commission could not set the new rate effective before June 2026. Had those arguments prevailed, the refund obligation would have been cut by years.
FERC rejected both arguments in the October 30 order. The commission relied on a D.C. Circuit decision, MISO Transmission Owners, which found what FERC described as “a clear exception” to the 15-month limit when the commission is remedying its own errors after being reversed in court. The logic is equitable as much as legal: the parties were on notice from the date of FERC’s initial order on the complaint that the decision could be invalidated and rates could change retroactively, so no one collecting the adder after February 2022 could claim surprise at a refund reaching back to that date. The commission said it was modifying the discussion in the order on remand while reaching the same result.
That reasoning matters beyond this docket, because it answers the objection most commonly raised against long refund periods: that retroactivity punishes reliance. FERC’s answer is that reliance on a rate under active challenge, after a complaint has put the rate’s lawfulness in issue, is reliance at one’s own risk.
What the refund window means for transmission rates
The practical consequence is in two parts. Going forward, Duke’s and ATSI’s formula rates lose the half-point of return — a permanent reduction in the revenue requirement that will show up in PJM transmission charges for Ohio load as the formula rates update. The effect on any individual customer’s bill will be modest, but the aggregate effect across Ohio’s load, compounded over years, is the reason the OCC pursued the case and the reason the utilities fought it.
Backward, the refunds with interest from February 2022 return the adder amounts collected during the litigation to the parties who paid them, through the PJM settlement process. The precise dollar figures will emerge in compliance filings, where the utilities must compute the adder amounts embedded in their formula rates over the refund period and add interest as FERC directs. Readers should treat any refund estimate circulating before those filings as provisional: the OCC has previously estimated that removing the adder would save Ohio customers hundreds of millions of dollars through 2031, but that was a forward-looking savings estimate across the Ohio utilities, not a computed refund total for Duke and ATSI.
There is a subtler rate consequence worth noting. ATSI provides transmission service in Ohio through FirstEnergy’s Ohio operating companies — Ohio Edison, Toledo Edison, and Cleveland Electric Illuminating — so the ATSI refund flows through a different corporate structure than Duke’s, which serves Ohio retail customers directly. A refund ordered is not yet a refund received, and the October 30 order’s work is not finished until the compliance filings are accepted and the money moves.
What it signals for the other transmission owners still collecting adders
The October 30 order does not, by itself, strip any other transmission owner of an adder. FERC acted on rehearing in a specific docket, against two specific utilities, on a record built around Ohio law. But the signal travels further than the docket, for three reasons.
First, the voluntariness test is now settled law in the Sixth Circuit and commission practice, and it is not an Ohio-only idea. The Ninth Circuit reached a similar conclusion in 2018, holding that FERC had acted arbitrarily in approving a 50-basis-point adder for Pacific Gas & Electric’s participation in the California Independent System Operator without addressing the argument that PG&E’s membership was required by a California commission order and therefore not voluntary. The through-line across both circuits is the same: an incentive cannot induce conduct the law already requires. Any transmission owner whose RTO membership is mandated by state law or commission order now faces a complaint template that has survived appellate review twice.
Second, the settlement argument is closed, at least for rates that can be decomposed. The most consequential sentence in the Sixth Circuit’s decision may be its conditional: if a settled rate can be separated into a base return and a 50-basis-point adder, the adder must come out. Transmission owners can no longer assume that burying an adder inside a comprehensive settlement insulates it from challenge; in future cases the practical question will be evidentiary — can the adder be identified and separated from the settled rate?
Third, the refund holding raises the stakes of defending an adder. Under the MISO Transmission Owners exception as FERC applied it here, a transmission owner that fights a complaint and loses does not merely lose the adder prospectively; it faces refunds reaching back to the complaint date, with interest, even beyond the usual 15-month window. That changes the settlement calculus for any utility weighing whether to contest a voluntariness challenge or negotiate the adder away: the longer the fight, the longer the refund tail.
None of this means a wave of adder removals is certain, and the limits of the holding should be stated plainly. The voluntariness question turns on the specific law of each state: a state that encourages RTO membership without requiring it presents a different case from Ohio. Complainants will still bear the burden of showing that membership is involuntary and that the adder is therefore unjust and unreasonable. And FERC itself has never questioned the adder’s value for genuinely voluntary membership — the policy of rewarding utilities for submitting to regional operation remains intact. What the Ohio case narrows is the adder’s reach, not its existence.
What to watch
Three things will determine whether the October 30 order delivers its promised savings or merely its promised principle. The first is the compliance filings: whether Duke and ATSI compute the refund amounts promptly and transparently, whether interested parties contest the calculations, and whether FERC accepts them without a further round of litigation over interest and allocation. The refund period spans more than four years of formula-rate updates, and the arithmetic will be contested in the details even if the principle is no longer in dispute.
The second is whether the OCC or another complainant tests the voluntariness theory against transmission owners in other states with mandatory-membership laws. The template is proven, the settlement defense is weakened, and the refund tail is long.
The third is quieter but more structural: what happens to the adder itself. The Ohio saga illustrates both the strength and the fragility of the adder as a policy tool. It worked as designed where membership was genuinely a choice. It failed where it became an entitlement collected regardless of choice, and it took a consumer complaint, a split commission decision, a court reversal, a Supreme Court denial, a remand order, and a rehearing order to correct a half-point of return. A policy instrument that requires that much litigation to police its own eligibility condition is worth redesigning, whether by tightening the voluntariness showing at the time of grant or by replacing the adder with incentives tied to outcomes — new transmission built, congestion relieved — rather than to membership alone.
That is the deeper lesson of EL22-34, and it is a lesson this desk’s transmission coverage keeps returning to. The grid’s hardest problems are rarely engineering problems. They are governance problems: who decides, who pays, and what happens when the rules reward the appearance of a choice rather than the choice itself. The October 30 order does not build a single mile of wire. It insists that a bonus for joining the regional grid goes only to those who actually chose to join it. Ohio’s customers will see the difference in their transmission rates. The rest of the industry should see it in the way it negotiates its next settlement.