Halcyon has just released its inaugural US utility rate case cost of capital tracker.  

This tracker currently encompasses 102 rate cases filed since 2021 by US investor-owned utilities, reflecting the mandated requests these companies submit to establish their regulated return on equity (ROE) for upcoming years. These rate cases cover 62 million customers, representing over a third of the 177 million investor-owned utility customers across the country. While the key output of a rate case is, quite literally, a number (consisting of one or two digits, a decimal point, and two subsequent digits), the process of arriving at  this figure is long, involved, multi-party, and hard to parse. 

If you’re reading this, you’re likely already aware of the importance of rate cases. In light of last week’s US elections, the pressing issue  of affordability–particularly concerning electricity costs–has become increasingly prominent in states like New Jersey and Georgia. A process and outcome that is historically of interest only to regulators, executives, analysts and investors is now playing out in public. A notable example is Florida Power & Light, which is requesting a $9 billion rate increase–the largest single increase in recent history–and a return on equity of 11.9%. This request, which is 130 basis points higher than its last approved ROE, would lead to significantly raised bills for millions of customers. 

Methodology

The topline figures tell a predictable story: utilities’ average requested ROEs are projected to rise to 10.4% in 2027 (note that this is in nominal terms, not real terms). Similarly, authorized ROEs show a familiar pattern: remaining consistently below requested levels. However, the spread between the two figures, which narrowed from 2021 to 2023, has widened, reaching its peak in 2027.

Beneath this topline figure lies a wealth of information–often too much to manage without technology. Each rate case encompasses demand projections (and their associated uncertainty), shifts in generation mixes, the prevalence of battery energy storage, capital expenditure on grid modernization, and much more. 

However, locating that information requires navigating through a large unstructured corpora.  To be precise, the average number of documents in the 102 rate cases in Halcyon’s latest tracker is 1,003 per proceeding. By comparison, the average count of documents in a random sample of 5,000 dockets in the Halcyon corpus is 2.6. Our approach, which is also used in our other data products, is well-suited to this sort of challenge. Halcyon combines data science techniques to identify relevant excerpts and documents, using LLMs to extract key information from these dense materials, resulting in an approachable but data-rich outcome. 

To build on the chart above, a parity chart offers a more granular perspective by plotting each rate case, highlighting the nuance of how awarded ROEs fall below requested rates.

This chart is the deliberately simple version, yet a lot is happening beneath the surface of this parity view. Those with eagle eyes may notice the two instances where regulators awarded utilities a higher return on equity than they requested (looking at you, Central Maine Power). 

The power of Halcyon’s data lies in its ability to transform regulatory nuance into measurable insight, enabling the kind of financialized comparisons illustrated in this parity chart and its underlying data that benefits both investors and regulators. A few examples of what can be explored:

• Compare the spread between requested and authorized ROEs by state, ISO/RTO, or utility footprint
• Examine how outcomes vary by ROE model—for example, CAPM versus DCF or multi-model averages
• Explore recommended ROEs from utility testimony, modeling notes, or combined methodologies to see how inputs drive outcomes.  

We have just shipped our first version of the Rate Case Tracker to customers. If you’re interested in learning more, you can find a preview and a form to request additional information here.

And given that this is version 1, we want to also note what to expect as this subscription evolves:

• More rate cases, obviously. We’ll expand coverage to include all investor-owned utilities (currently limited to those with revenue over $1 billion) and add new rate cases as soon as they become public (and as a machine learning-based aside, we find that rate cases are some of the easiest proceedings to identify).
• Greater narrative depth. Expect more detailed information throughout each rate case, including timeline updates, extracted testimony, and other key developments.
• Continued exploration - by you! The Rate Case Tracker links not just to the relevant proceeding, but to many documents within each proceeding to substantiate the figures. Those documents are yours to explore, using our search and query capabilities.

Halcyon subscribers have already received the first version of the Rate Case Tracker.  Interested in learning more? Click here.

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