By the OGJ Online Staff
HOUSTON, Feb. 14, 2002 — ISO New England overstepped its authority in agreeing to merge with the New York Independent System Operator, a coalition of New England municipal utilities complained to federal regulators.
They also contended the two ISOs’ action violated Federal Energy Regulatory Commission rules on off-the-record communications related to contested dockets.
The New England and New York ISOs Jan. 28 announced signing a letter of intent to develop a common electricity market. The agreement also set a June 30 deadline for the two regions to propose to the FERC a joint, consolidated RTO structure.
ISO New England is funding the negotiation process without the consent of New England Power Pool (NEPOOL) participants, the utilities said, in violation of an agreement between NEPOOL and ISO-New England that defines the ISO’s operating authority.
NEPOOL, an association of the region’s electric utilities, generators, power marketers, and transmission owners, assigned specific system operating responsibilities to ISO New England in an agreement approved by the Federal Energy Regulatory Commission set to expire later this year.
“The ISO has no money at risk here. The only funds available to it are those received from ratepayers,” the utilities stated.
The public power filing comes against a backdrop of several ongoing FERC proceedings regarding the development of regional transmission organizations (RTO) in the Northeast. In July 2001, the FERC directed the consolidation of the New England, New York, and Pennsylvania-New Jersey-Maryland (PJM) electric control areas. Applications for rehearing have been pending before the FERC for several months, while the parties have gone their separate ways, raising questions about FERC’s response.
PJM Interconnection LLC announced plans to link up with the Midwest Independent Transmission System Operator Inc., instead of New York and New England, as ordered by FERC.
The utilities said documents related to the proposed merger of the New England and New York electric systems should become part of the public record. The ISOs sent the agreement with a cover letter to each FERC commissioner but did not to file the documents in any of the ongoing FERC proceedings.
In addition, the public power utilities called for the completion and public disclosure of an economic analysis showing whether consumers will benefit from a merger of the two systems before the merger process continues.
“ISO-NE’s determination to proceed without disclosing any supporting analysis cannot be justified by invoking its ‘independence’ from the market participants and consumers, who are once again being tapped to pay for the new plan ISO-NE is developing,” the utilities said. They said independence without accountability is wasteful and ultimately self-defeating, “especially since the ISO’s only source of funds is the NEPOOL participants and their customers.”
ISO New England also should be required to secure its authority to engage in further negotiations and merger activities, including the development and filing of an RTO proposal, the coalition said. The ISO lacks this authority under its existing agreement with NEPOOL and has not requested or obtained such authority from the NEPOOL participants, the utilities said.
The public power group said it has no quarrel with the general purpose of the merger negotiations — to develop a broader electric market in the Northeast –but is concerned negotiations are taking place prior to any demonstration that a merger will benefit consumers and without the benefit of sufficient stakeholder input.
In addition to the Massachusetts Municipal Wholesale Electric Co., others supporting the public power filing include the Connecticut Municipal Electric Energy Cooperative, the Vermont Public Power Supply Authority, the New Hampshire Electric Cooperative and the Massachusetts municipal utilities serving the communities of Westfield, Chicopee, South Hadley, Braintree, Reading, and Taunton.