Regional transmission plan approved for New England ISO

Holyoke, MA, October 19, 2001 — The Board of Directors of ISO New England, operator of the region’s bulk electric power system, unanimously approved a five-year assessment of the region’s transmission system.

The assessment, known as the 2001 Regional Transmission Expansion Plan (RTEP01), is a thorough evaluation of New England’s bulk power system for the period of 2002-2006 and identifies areas of needed improvement to ensure power system reliability, efficiency and competitive wholesale electricity markets.

“The Regional Transmission Expansion Plan is one of the most comprehensive evaluations of a bulk electric power system in the country and should serve as a model for similar assessments in other regions,” said Gordon van Welie, president and CEO of ISO New England Inc. “The RTEP combines several separate studies of the region’s bulk power system, and examines transmission congestion on the power system, its impact on system reliability and cost to consumers. By identifying transmission system inefficiencies, the plan should serve as a blueprint for investment in transmission expansion and upgrades, siting of new generation, and the development of viable demand response programs.”

ISO New England, New England transmission owners and other industry stakeholders including state regulatory agencies all took part in the year-long effort to develop the assessment. RTEP01 includes a Regional Resource Adequacy Assessment, a Projected Congestion Cost Assessment and presents the status of ongoing transmission studies.

Conclusions from the RTEP01 plan include:

* Southwestern Connecticut regularly experiences severe transmission constraints which, if not corrected, will continue to pose severe reliability problems. As recently as late August, load shedding for that area would have been the only choice had a major power plant or transmission line servicing that area suddenly tripped out-of-service. * The transmission system in southern Maine and eastern New Hampshire has become constrained. These transmission lines do not have enough capacity for newly-developed Maine-based power plants to send excess electricity out of the region. This past July and August, it is estimated that $170 million dollars was spent on dispatching more expensive generation in New England because less inexpensive, excess generation in Maine could not be transmitted to areas experiencing higher demand. * Significant transmission congestion will exist from an economic viewpoint, primarily due to export constraints from Maine, southeastern Massachusetts and Rhode Island, and import constraints in southwestern Connecticut and Greater Boston. The congestion costs could range from $125 to $600 per year million depending on study assumptions.

The plan also discusses how the upcoming Standard Market Design (SMD), a new wholesale market model to be implemented in 2003 which includes locational-based pricing, will place greater economic emphasis on the location of new generating units, upgrades to transmission facilities and demand-side management programs in transmission constrained areas.

“Earlier this year, the Federal Energy Regulatory Commission (FERC) gave ISO New England the responsibility for developing a regional transmission planning process,” said van Welie. “FERC stated that ISO New England was the only entity in a position to evaluate the necessary information in an unbiased manner and develop a plan focused on the needs of the overall market. The RTEP plan accomplishes FERC’s charge.”

ISO New England Inc. is the not-for-profit corporation responsible for the day-to-day reliable operation of New England’s bulk generation and transmission systems, with an installed capacity of more than 27,000 megawatts. In addition to operating the bulk power grid, ISO New England is the administrator of the region’s wholesale electricity marketplace and the Open Access Transmission Tariff on behalf of the New England Power Pool. ISO New England is based in Holyoke, Massachusetts.

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