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Wholesale and Regional Issues

Wholesale and Regional Issues

The state of the electric industry in New Hampshire depends on two important entities outside New Hampshire and beyond the jurisdiction of the New Hampshire Public Utilities Commission: the Federal Energy Regulatory Commission (FERC) and the Independent System Operator–New England (ISO-NE). FERC regulates transmission and wholesale sales of electricity in interstate commerce; licenses and inspects hydroelectric projects; oversees certain environmental matters; and administers accounting and financial reporting regulations. The ISO-NE was established as a not-for-profit private corporation on July 1, 1997, following its approval by the FERC as the regional transmission operator.

ISO-NE manages the New England region's electric bulk power system (the generation and transmission of electricity on the wholesale and interstate level), and administers the region's wholesale electricity markets, ensuring the system’s day-to-day reliable operation and fair administration of the markets. ISO-NE also administers a comprehensive regional planning process, issuing a Regional System Plan each year. These 10-year plans include forecasts of future demand for electricity within the New England region and how the system as planned can meet demand by adding generating resources, demand-side resources (incentive-based controls on the amount or timing of electricity use), and transmission. Each plan addresses region-wide needs as well as needs in specific areas to ensure the reliability of the system and compliance with national and regional planning standards and procedures. Additional information on ISO-NE can be found at their web site, www.iso-ne.com.

New England regional and wholesale electricity markets underwent a major change in 2006 when a new capacity market was developed and implemented. In response to a FERC edict to ensure that New England ’s long-term electric needs would be met, the Forward Capacity Market ( FCM ) was developed. The FCM was the result of months of negotiations between the various stakeholders in New England (electricity generators, transmission system owners, regulators, policymakers, customers/end-users, and ratepayers) and was approved by FERC in June of 2006. Under the FCM design, ISO-NE will project the capacity needs of the power system three years in advance and then hold an annual auction to purchase power resources to satisfy the region’s future needs. These resources include increased electricity supply from power plants or decreased electricity use through demand-response resources. Demand-response resources account for almost 10% of the capacity required to meet New England’s needs; that percentage is expected to increase in future auctions. This has and will continue to save the electric ratepayers in New England money.

Another major change in the wholesale New England electric markets is the massive increase in transmission spending that is now occurring and planned for the near future. Total transmission costs in the region are expected to grow from a little over $1 billion in 2007 to a cumulative total of more than $8.5 billion by 2012. This large increase in spending is due to lack of capital investment spending in the last 10 to 15 years and increased financial incentives awarded by FERC to companies building new transmission projects. The New Hampshire Public Utilities Commission, along with other New England state commissions, is presently working with ISO-NE and the transmission companies to develop better cost estimating and cost containment methods for these new projects to ensure just and reasonable electricity prices for New England’s ratepayers.

For more information on these and other important issues, visit the FERC and ISO-NE websites.

Other regional entities and initiatives that involve New Hampshire include New England Conference of Public Utilities Commissioners (NECPUC), New England Governors’ Conference (NEGC), and the New England Demand Response Initiative (NEDRI).

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