Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Power Pool Politics: How New England Agreed to an ISO

Fortnightly Magazine - February 15 1997

their votes are weighted in accordance with their "business interests." Five percent of the total vote is to be distributed by count, so that each member gets the same vote. The remaining 95 percent is divided evenly into six classes. Two classes are related to load: average monthly peak and average monthly loads. Two are related to power supply: capacity owned or purchased and energy produced or purchased. Two are related to transmission: transmission miles weighted by voltage and transmission revenue requirement.

A participant's vote may change monthly; its contribution to NEPOOL and the system operator's fixed costs will be proportional to its voting strength. No participant may hold more than 25 percent of the vote. The surplus is distributed among participants.

In its alternative proposal, MMWEC objects to the vote given to transmission interests, which, it argues, would add to the voting strength of the larger entities. It proposes instead that each transmission component be given 5 percent of the total weight, with the four load and supply components dividing 85 percent of the total weight equally. This approach increases the influence of load servers as compared with generation and transmission providers.

Executive Committee. The Executive Committee serves as the principal decision-making arm. Each participant having 3 percent of the vote in the management committee is entitled to a vote. In addition, the executive committee reserves five group seats for entities that may not have 3 percent: consumer-owned utilities, independent power producers, marketers and brokers, transmission-only companies, and small investor-owned utilities. Thus, the committee initially could include as many as 14 members.

Majorities required for action by the Management and Executive Committees have been reduced. For example, to amend the current NEPOOL agreement requires 85 percent of the vote, and a veto must include two or more participants. The restated agreement calls for 70 percent. The vote of any one participant, for purpose of the veto, is limited to 18 percent.

The reduction in the required majority for approval is supposed to reflect a broader and more diversified membership. In its filing, MMWEC argues for the current rule, stating that the reduced majority makes it too easy for the larger entities to dominate decision-making.

ISO Participation. The system operator will hold a non-voting seat on all committees and can seek to influence their decisions. But Eastern Utility Associates, which signed the restated agreement, expressed its concern that on many operation matters the committees will make decisions that the system operator will not review. This process would allow domination by the larger generation and transmission entities, says EUA, and could occur when the transmission interest of a single company had no position on a generation matter and simply voted with its affiliate.

Overall, these governance provisions may seem to fall far short of the measures necessary to insure that the traditional generation and transmission providers cannot dominate NEPOOL decisions. Negotiators were aware of this possible criticism, but it became increasingly academic as the role of the ISO grew.

The System Operator

The regulatory commissions for the six New England states focused their