Rebalancing Return on Equity to Accelerate Clean Energy Transition

US-based RMI has emphasized the need to correct the allowed return on equity (ROE) for utilities to facilitate a rapid transition to a clean energy future. In their findings, they suggest that moving the ROE closer to the cost of equity (COE) can save consumers billions in utility bills, potentially $4 billion annually for every 1% reduction in ROE. RMI’s research indicates that allowed utility ROEs currently exceed investor required returns, which creates financial strain on consumers and hampers the affordability and pace of clean energy investments. Rebalancing these rates can lead to more competitive procurement of renewable resources, ultimately aiding in the climate objectives of the electric utility sector.