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In 2014, FERC adopted a new theory of capital markets for the purpose of setting authorized returns-on-equity: that all observed dividends and interest rates were anomalous and therefore unreliable indicators of the returns necessary for investors to hold the stocks and bonds of transmission owners. The new theory, used to justify higher authorized ROEs, rejected evidence of fundamental conditions in capital markets and explicitly adopted arguments by investor-owned utilities regarding unreliable markets. After a judicial remand, FERC abandoned the new theory, but consumers in New England and the Midwest were arbitrarily charged hundreds of millions of dollars over several years due to unjust and unreasonable rates for transmission service. [ABSTRACT FROM AUTHOR]

In the traditional portfolio models, the return rates of risky assets are usually defined as random variables or fuzzy variables. However, when some events such as financial crises or wars occur that can cause instability in financial markets, the results of these assumptions are not always satisfactory. Therefore, some scholars try to use uncertain variables to express the return rates. In this paper, a two-factor uncertain portfolio problem under optimistic value criteria is studied, where we use the optimistic value instead of expected value to describe the investment return and study the impact of economic circumstance factor and corporation's specificity factor on the return rates. Firstly, a two-factor optimistic value-variance-entropy model with background risk is constructed, in which the total investment return consists of the risky asset return and the background asset return. Then, considering the investors with two kinds of risk preferences, a three-step method is applied to convert the bi-objective optimization model. Moreover, a moment estimation method is used to process the expert-estimated data on the return rates. Finally, a numerical simulation is presented for showing the applicability of our models and solution method. • We use optimistic value to represent the return rather than expected value. • The multiple factors and background risk are considered simultaneously. • Three-step method is used to convert the model into two single-objective models. [ABSTRACT FROM AUTHOR]