In its comments to the Federal Energy Regulatory Commission (FERC) on its Notice of Proposed Rulemaking, “Regional Transmission Organization,” NU stated its belief that the Commission should continue to expand the foundation of a competitive electricity market, extending customer choice over a broader range of supply and delivery options. “Customers should be able to choose among a variety of transmission routing options,” said Michael G. Morris, NU president, chairman and chief executive officer, “and secure the best price for each transaction.” [For the full text of NU’s filing, see NU’s web site, www.nu.com/ebb2/home.htm].
NU’s 30 years experience in the New England Power Pool and its involvement in pool restructuring activities provide first-hand experience in creating competitive power generation markets.
NU envisions a successful transmission market promoting development of customer choice in transmission access, in support of the Commission’s policy of having a competitive electric market. “The evolutionary path for transmission entities can mirror that taken by the natural gas transportation and telecommunications industries,” said Morris, “where individual companies combined voluntarily based on market forces and individual decisions.
“The development of a nationwide transmission system that offers customers true choice is essential to fully realize the benefits of the competitive electric marketplace envisioned by FERC Order 888. As a result of the FERC-led restructuring of the 1980s, the natural gas industry now enjoys competition in both the commodity and transportation sector which has led to increased gas availability across the country and to dramatically reduced prices for all gas customers.”
In NU’s ‘Highways of Commerce’ model, the Commission would encourage development of transmission facilities and technology through its support of innovative rate designs and expanded transmission siting authority. Regional Transmission Organizations (RTO), such as ISO New England, would address short term commercial grid use issues including parallel loop flow and congestion management. With competing investments and emerging technologies providing controls for electric flows, metering and telecommunications, the multi-region transmission highway model will eliminate congestion, bolster reliability and enable all customers to benefit from the competitive electric industry.
According to Morris, successful transmission restructuring is achievable through reliance on free and competitive markets, defined as broadly as possible, to ensure bulk power is competitively available to customers over large geographic areas. The adoption of efficient, light-handed regulation that promotes competition by simplifying and clarifying federal and state responsibilities also will be critical to the success of transmission restructuring.
In NU’s comments, it cautions that the evolution toward a super-regional RTO could lead to a giant transmission monopoly requiring additional regulation and declining customer choice options. It could create an artificial market place where transmission owners are required, through regulation, to give up their property rights as decisions are reached through regulatory mandate, rather than through market forces. This could inhibit investment in transmission and creativity in management, slowing the market response to customer needs and perpetuating congestion.
NU applauds FERC for its steady march towards a competitive electric industry. As a leader in the evolution of the electric industry, NU operating companies have divested or are in the process of divesting their generation assets. The NU transmission system is under the control of ISO New England, an Independent System Operator approved by the FERC. “As New England continues to experience success with restructuring, we urge other utilities to join us in realizing the goals envisioned by FERC in 1996,” Morris said. “Visible success includes increased transmission reliability, prioritized expansion and market driven returns.”
Northeast Utilities (NYSE: NU) is a Fortune 500 diversified energy company located in Connecticut with operations throughout the Northeast. Through its competitive and regulated subsidiaries, NU provides Energy for a Changing World, with a full range of energy products and services to millions of residential and business customers from Maine to Maryland. From delivering electricity and natural gas, to marketing energy commodities, to operating and maintaining power plant facilities, NU is committed to safety, reliability and expanding consumers' energy options. For more information on Northeast Utilities and its subsidiaries, visit the NU family of Web sites at www.nu.com.
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