Every month, tens of millions of households across the PJM grid region pay their electric bill without a second thought about where each line item comes from.
They pay for the power. They pay for the wires. They pay for the poles.
And for more than a decade, a significant chunk of many of those bills included a charge regulators now say should never have landed there at all.
The mechanism that put it there was a single exemption tucked inside a grid operator’s tariff, and it took one holdout utility to unwind it.
The rule most ratepayers have never heard of
Deep inside the operating tariff of PJM Interconnection, the grid operator that coordinates electricity for roughly 65 million people across 13 states and Washington, D.C., sat a provision called the de minimis threshold.
In plain terms, it worked like this: if a transmission upgrade was deemed small enough relative to a large load zone, specifically, if a zone’s projected share of power flow on an upgrade fell below a set threshold, that zone was exempted from paying for it.
On paper, it sounds like an administrative shortcut. In practice, the exemption meant that other utilities, and ultimately their customers, absorbed costs that the large zones were generating but not paying for.
The Commission eliminated PJM’s long-standing de minimis threshold exemption, a rule that arguably shielded large load zones from paying for certain transmission upgrades despite significant usage, after the U.S. Court of Appeals for the District of Columbia found the exemption violated cost-causation principles.
One utility decided to fight what everyone else accepted
When a proposed settlement came before FERC to resolve the long-running dispute over how those costs should be reallocated, almost every electric utility in the PJM region signed on.
Almost every one.
PSE&G was the only electric utility in PJM that opposed the settlement, which has now been rejected by FERC.
PSE&G, alongside New Jersey regulators and consumer advocates, filed multiple rounds of pleadings arguing the deal was fundamentally unfair.
PSE&G argued that the proposal was unjust, unreasonable, unduly discriminatory, and unsupported by the evidence, arguments FERC ultimately adopted in its order.
Why the grid’s cost math is harder than it looks
Transmission cost allocation is one of the most contested corners of American energy regulation, and for good reason.
A utility rate case establishes the cost of service for providing transmission, covering construction, operations, maintenance, and a reasonable return on investment for shareholders.
When those costs get misallocated, even by a rule that sounds minor, the dollar amounts can compound for years.
The de minimis rule had been doing exactly that. In response to aging infrastructure, PJM authorized a series of upgrades to facilities owned by PSE&G, the dominant electricity provider in northern New Jersey.
The question that festered for a decade: who should actually pay for them?
A federal order, $1 billion on the table, and refunds dating back to 2015
On March 6, 2026, FERC settled the argument with a sweeping ruling, issuing its order on remand, rejecting the tariff proposal and settlement, directing a compliance filing, and establishing paper hearing procedures.
The numbers that fell out of it were striking.
FERC opened the door to an estimated $1 billion in refunds, including interest, and re-billing stretching back more than a decade.
For New Jersey customers of PSE&G alone, the picture was already concrete: according to PSE&G’s official announcement, customers will receive refunds of approximately $100 million for the three-year period covering 2020, 2021, and 2022 alone.
Because FERC has directed PJM to recalculate cost assignments dating back to 2015, the actual savings figure is expected to be significantly higher.
That math matters in a broader context: FERC issued show cause orders to each of the six RTOs/ISOs and their transmission owners, directing them to justify how their existing tariffs provide for the interconnection of large and co-located loads to the electric grid or to propose revisions, part of its ongoing scrutiny of how grid costs land on ordinary ratepayers.
What comes next for ratepayers and the rest of the grid
PJM must now file a compliance submission recalculating cost assignments under the corrected methodology.
The recalculation window stretches back to 2015, meaning more than a decade of cost data will be reviewed, and the final refund figure for all affected customers is expected to exceed the $100 million already confirmed for the New Jersey three-year slice.
Across the country, electric rates have faced sustained upward pressure in recent years, a climate in which any ruling that pushes money back toward customers carries real weight for household budgets.
The PSE&G case is a reminder that the line item labeled “transmission” on a utility bill is not a fixed fact of nature. It is the result of a specific tariff rule, written by people, and reviewable by a federal commission.
And sometimes, one utility refusing to sign a settlement is all it takes to rewrite the math for millions of homes, going back further than most customers would ever think to look. You can track how those grid cost pressures compound when new loads hit an already-strained system.
