New realities demand new direction from utilities.
Power Pool Politics: How New England Agreed to an ISO
With its membership opened, NEPOOL sets a transmission tariff, but still must develop competitive markets. In 1993, after a series of attempts going back as far as 1971, the New England Power Pool failed to reach agreement among its members for a regional transmission arrangement. But destiny then took over (em with help from the newly enacted Energy Policy Act (em to lead pool members back to the bargaining table. Finally, on Sept. 30, 1996, NEPOOL announced that its executive committee had agreed in principle on restructuring the pool. The agreement provided for a regional transmission group and tariff, a New England independent system operator, and criteria for developing competitive markets for energy, capacity and ancillary services.
But that's just the beginning. The NEPOOL experiment must yet face its first test when it undergoes review at the Federal Energy Regulatory Commission. (See Docket Nos. 0A97-237-000, et al., filed Dec. 13, 1996.) Granted, the New England negotiators made a good-faith effort to meet all FERC requirements for open access, while taking into account the particular history of the region. But that effort could fall short of demands for quick development of an open market for bulk power, free from domination by traditional players.
Whatever the result of the FERC review, the New England system will remain a work in progress. Work will continue on developing the market. Pressure may build to simplify the transmission rules. But as this process continues, the new ISO may well prove to be the most important part of the package, exerting broad authority over the evolution of NEPOOL.
Even before the FERC required open membership, NEPOOL had taken two steps to make restructuring more inclusive. First, it had redefined membership eligibility and swiftly grew from 90 to more than 140 participants, adding marketers and independent power producers. (See sidebar, "NEPOOL Evolution.") Second, the NEPOOL Review Committee became the coordinating forum for restructuring. Committee membership was opened to any interested party. Utilities and marketers could
participate. So could state governments and regulators. This commitment to open the process complicated and slowed negotiations, but allowed all sides to be heard.
Though absent from the negotiations, the FERC still influenced the debate, with its various proposals and rules on transmission access, and especially with its Nov. 13 decision on restructuring the Pennsylvania-New Jersey-Maryland Interconnection. (See, Atlantic City Elec. Co., et al., al., 77 FERC ¶61,148.) These and other orders were studied for guidance and argued over as if they were theological testaments. The parties always attempted to minimize differences with FERC policy, but NEPOOL presented some special circumstances that did not fit neatly with FERC formulas.
A regional transmission arrangement was essential to restructuring. In this case, a NEPOOL transmission tariff would constitute a regional transmission group, or RTG.
NEPOOL already was a free-flowing transmission system that did not require scheduling for internal transactions. The pool required that new generation connecting to the grid should not adversely affect existing generation and transmission. As a result, new transmission was added to maintain the free flow. All