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New York, New England ISO’s sign single market proposal

Kate Thomas
OGJ Online Staff

HOUSTON, Jan. 29, 2002 — As expected, ISO New England Inc. and the New York Independent System Operator Tuesday agreed to develop a single electricity marketplace based on a common market design.

The two ISOs, which oversee the electric power and wholesale market systems in New England and New York, also agreed to jointly evaluate the feasibility of creating a Northeast Regional Transmission Organization.

The agreement comes in the wake of PJM Interconnection LLC’s decision to link up with the Midwest Independent Transmission System Operator Inc., instead of New York and New England, as ordered by the Federal Energy Regulatory Commission and raises questions about how federal regulators will respond.

In July the commission ordered PJM, ISO New England, and the New York Independent System Operator to begin mediation on forming a regional super RTO. With the organizations going their separate ways, the order could prove to be politically embarrassing to FERC Chairman Pat Wood.

Both New England and New York protested various provisions of a proposed combination, especially the dominant role PJM insisted on having in the resulting organization. Led by Rep. Ed Markey (D-Mass.), a member of the US House committee that oversees FERC, the New England delegation told Wood having equal representation on the RTO was the “only” acceptable solution.

Giving PJM absolute control would be unlawful, deprive the board of legitimacy, and provoke protracted judicial challenges,” the New York ISO said in comments on the proposal last summer. Last week New York ISO spokeswoman Carol Murphy said there hadn’t been any discussions with PJM in some time, while talks were ongoing with New England. She predicted the two could be making an announcement shortly.

Tuesday, the New England and New York ISOs said they believe a common electricity market and eventual RTO will improve the seamless interchange of power in the Northeast, including the Canadian power systems.

Both are members of the Northeast Power Coordinating Council, an electricity market of more than 125 Gw spanning the US Northeast and Canada. A combined New England and New York market would serve 33 million people with a combined peak electrical load of 56,141 Mw. It would encompass seven states.

New England ISO Pres. Gordon van Welie said the next step is to obtain comments from state regulators and market participants. Under joint leadership of the CEOs and an oversight committee composed of board members from each ISO, the two ISOs would address a range of issues, including market design, transmission planning, technology assessment, and a joint stakeholder process. Van Welie said the goal is to obtain FERC approval of their plan later this year.

In addition to capitalizing on existing market similarities and natural flows of power, the CEOs said a Northeast RTO and common market would help solve three of the Northeast’s most severe transmission bottlenecks: Greater Boston, the New York City area, and southwestern Connecticut.

The agreement would also accommodate independent transmission companies, if formed in the Northeast. “Independent transmission companies would encourage much needed investment in transmission infrastructure,” said van Welie.

In conjunction with the New England-New York agreement, operators of the electric systems for the Canadian provinces of Ontario, Quebec, New Brunswick, and Nova Scotia expressed support for the proposal. The provinces are all interconnected with the proposed Northeast RTO region and already conduct a significant amount of electricity trading in the Northeast.

Although the Canadian systems are not under FERC jurisdiction, the Ontario Independent Electricity Market Operator (IMO), TransEnergie, the Hydro-Quebec division responsible for the operation of Quebec’s transmission system, NB Power, and Nova Scotia Power are expected to work closely with New England and New York.