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Senate Panel Gets Tutorial From New England on Electric CompetitionJoseph F. Schuler Jr.

Fortnightly Magazine - November 15 1996

advantages to the use of a system benefits charge, portfolio standards, green pricing, and tax credits."

Like Cowart, many of those testifying also supported a regional independent system operator (ISO) to ensure coordination, reliability, security, and stability of the power system.

"Under current law, a truly independent ISO cannot be created without greatly affecting state-regulated generation and transmission owners, but the ISO would be regulated by FERC," Cowart said. "Given the importance of such an entity to the region, cooperative oversight by both the FERC and state regulators is highly desirable. This might best be accomplished through a regional 'Joint Board' consisting of both state and federal regulators."

Several witnesses addressed the reliability issue.

Richard M. Chapman, president of Vermont Electric Power Co., Inc., quoting a February 1, 1996, PUBLIC UTILITIES FORTNIGHTLY article, said there were two kinds of reliability: sufficient generating capacity and sufficient transmission capacity. "Reliability is not an accident," Chapman said in his written testimony. "It is the result of careful system planning, constant monitoring, and very substantial investment in the necessary physical facilities, including transmission facilities."

But reliable electric system planning and operations require cooperation and coordination, Chapman said, "cannot be mandated by regulation or legislation."

John Goodrich, a manufacturing v.p. with EHV Weidman, Inc., said contracts should replace utilities' obligation to serve, and that utilities shouldn't be obligated to stand by as suppliers of last resort. Transition or stranded costs should be shared, Goodrich said. "Transition costs must not be recoverable by utilities until all utilities have demonstrated that they have taken reasonable steps to mitigate such costs. ... Transition costs should be limited to the net cost of generation that exceeds the market price."

Other witnesses included Donald F. Santa, Jr., FERC commissioner; John B. Howe, chairman of the Massachusetts Department of Public Utilities; Lewis M. Milford, energy project director of the Conservation Law Foundation; and Richard Sedano, commissioner at the Vermont Department of Public Service. t

Joseph Schuler is an associate editor of PUBLIC UTILITIES FORTNIGHTLY. E-mail schuler@pur.com

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