Commission Approves New England RTO, With Certain Provisos, Orders Hearing On Rate Of Return Issues
The Federal Energy Regulatory Commission today granted regional transmission
organization (RTO) status to ISO New England (ISO-NE) and the New England
transmission owners (the filing parties) pending the acceptance of certain conditions.
"This RTO filing reflects extensive and difficult discussions," said FERC
Chairman Pat Wood, III. "The New England region shares a long history of voluntary commitment to regional power markets. Although agreement could not be reached on
every issue, the parties achieved fundamental consensus on a commitment to form a
single RTO that builds on the platform set in place by the New England Power Pool
and ISO-NE. The evolution from a power pool to an ISO and now an RTO is a positive
step and will help strengthen the markets and improve reliability in this, as well as in
its neighboring regions."
Since 1971, the New England Power Pool (NEPOOL) has served as a voluntary
organization of transmission and generation owners, suppliers, publicly-owned entities
and end-users in Connecticut, Massachusetts, New Hampshire, Rhode Island, Vermont
and portions of Maine. ISO-NE, an independent entity that contracts with NEPOOL to
perform the functions of open access as an Independent System Operator (ISO), has
operated since 1997.
RTO-NE, which would become the successor to ISO-NE, complies with the
minimum characteristics and functions of an RTO, subject to conditions, the
Commission said. The New England RTO will build on the successful features
contained in ISO-NE, as a not-for-profit entity governed by an independent, nonstakeholder
board.
In Order No. 2000, the December 1999 rule that encouraged regional grid
coordination and planning, the Commission outlined the specific characteristics and
functions required for RTOs.
To better conform to the provisions of Order No. 2000, the Commission directed
the filing parties to resolve seams issues with its neighboring New York Independent
System Operator (ISO). The applicants must file an agreement regarding elimination
of separate rate charges between the New York ISO and New England with the
Commission within one year of the date of their compliance filing. In addition, since
the New York ISO has significant trade with the Mid-Atlantic region's PJM RTO, the
report should also explain the role of PJM in the resolution of seams issues, the
Commission said.
Today's order also addresses a related filing on return on equity (ROE) issues
applicable to transmission rates charged by the New England RTO (Docket No. ER04-
157-000). The Commission set for hearing a proposed 12.8 percent ROE applicable in
regional and local transmission rates. Consistent with decisions in prior RTOs, the
Commission allowed a 50 basis point adder for transmission used for regional service.
The Commission set for hearing a proposed 100 basis point adder applicable to all
future transmission expansion.
The Commission said that the New England transmission owners are permitted to
withdraw from their existing agreements governing the operation of NEPOOL in order
to file the necessary replacement agreements to establish the RTO. The Commission
found that the applicants are permitted to make the RTO filing, looking at both their
contractual rights under their existing NEPOOL agreements and as public utilities
under the Federal Power Act. The Commission ordered that the filing parties identify,
in a subsequent filing, relevant assets that NEPOOL will continue to own after the
functions and duties of ISO-NE are terminated and indicate how the facilities will be
acquired from NEPOOL.
The New England transmission owners are: Bangor Hydro Electric Company;
Central Maine Power Company; NSTAR Electric & Gas Corporation; New England
Power Company; Northeast Utilities Service Company; The United Illuminating
Company; and Vermont Electric Power Company.
R-04-08 (30)
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Contact
Information:
Barbara A. Connors
202-502-8680
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