Reading base and operative returns in rate orders
A return stated in an order can describe a base estimate, an adjusted award or a formula input. I separate those meanings before comparing the numbers.
Two examples
Central Maine Power’s 2020 order sets a base return of 9.25%. A 100-basis-point performance reduction produces an operative award of 8.25%. United Illuminating’s 2023 order has a 9.10% base return and a 47-basis-point reduction, producing 8.63%.
| Decision | Base ROE | Reduction | Operative ROE |
|---|---|---|---|
| Central Maine Power, 2020 | 9.25% | 100 bp | 8.25% |
| United Illuminating, 2023 | 9.10% | 47 bp | 8.63% |
Why the distinction matters
If I use the operative award as though it were an unadjusted financial estimate, a performance mechanism becomes mixed into the apparent relationship between financial conditions and allowed returns. The arithmetic is correct, but the interpretation changes.
These examples are a reason to keep the original orders alongside the case table. The national panel provides broader coverage. The documents identify how a particular return was constructed. Neither substitutes for the other.
How I record it
The document records retain the base return, adjustment, operative return and source page separately when the order supplies them. Formula implementations and settlement approvals are also identified separately in the cohort.
This classification does not establish a general regional pattern from two cases. It makes a comparison more precise by distinguishing the quantities being compared.