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Isn't that Special?

TISO wins prize for expanding its payroll.

Fortnightly Magazine - July 15 2001

Utility competition was guaranteed to drive costs and rates down, giving a break to consumers. That much was certain. That's why state policymakers were so eager to jump on the bandwagon for deregulation.

Of course, only a portion of what the customer pays for electricity covers the direct cost of the product. Another chunk goes to pay the salaries of the people behind the scenes. But not to worry, since each deregulation of a formerly regulated U.S. industry (banking, railroads, airlines, trucking, telecommunications-you name it) served to tighten payrolls, making each business leaner and meaner. This, too, we know to be true.

Yet, back in the electric industry, where utilities are consolidating transmission line operations among a smaller universe of regional independent system operators (ISOs), the facts seem a bit inconvenient.

ISOs payrolls are growing—at a faster rate, it seems, than utility payrolls are shrinking.

IN THE NORTHEAST, SOME 300 PEOPLE STAFF THE OPERATIONS OF ISO NEW ENGLAND, and the number is growing.

"Nobody can fathom the amount of work we do here," says Craig Kazin, a public relations officer for the outfit. He says that, in a "regulated environment," NEPOOL operated for almost 30 years with 110 employees. Along comes the ISO, and that number has ballooned to almost three times that. The reason? Kazin says that once the ISO was formed, they had to bring in many support roles, plus people to fill positions that were formerly sub-contracted out-roles such as human relations and information technology.

"Our employment levels are adjusted accordingly ... there are complexities in doing what we do now that weren't around in a regulated environment. You need specialized people to do these tasks."

And, pay them "specialized" salaries, too?

Kazin observes that while his ISO carries high overhead, the cost for getting it up and running was nothing like that in California. "California was the granddaddy of spending. ... They spent $350 to $400 million getting their ISO up and running. They had nothing in place. At least New England had an infrastructure to work with."

Yes, California spent a lot of money getting their infrastructure in place so they could begin operating the grid in April 1998. To date, the California ISO employs about 400 full-time people, and "another 200 contractors-including engineers, and IT and computer types," says spokesman Gregg Fishman. And have rates in California decreased since April 1998?

In New York, the ISO was officially formed in December 1999. When the ISO took over operations, there were about 140 people on the payroll. Today, the ISO says there are about 150 employed, and that jobs funded in the budget remain to be filled. So, expect that number to rise by January, as well.

CONSIDER ALSO THE PJM ISO, WHERE BETWEEN 350 AND 400 PEOPLE GO TO WORK EACH DAY. In April 1995, when the ISO came online, there were 90 employees. Today, six years later, that number is four times what it once was. And, according to some at PJM, that number could increase by another

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