To the Editor:

After reading Gordon van Welie’s article in your November 2005 issue (“New England: A Critical Look at Competition ”) I couldn’t help but think back to California in 2000. Van Welie, who is president and CEO of ISO New England, is trying to feed the citizens of New England the same brand of malarkey that the California ISO fed the California Public Utilities Commission in 2000 when wholesale and retail prices in California were perfectly linked and nearly succeeded in bankrupting the wealthiest state in the country.

Van Welie’s ISO wholesale market in New England is piddling, accounting for approximately 10 percent of the sales in New England. Most sales in New England are done through bi-lateral contracts that have served the citizens of New England fairly well. The further they are from van Welie’s ISO wholesale market, the better off they will be.

What Van Welie’s ISO has succeeded in doing is to make New England vastly dependent on gas-fired generation, and they then have the nerve to explain that one of the reasons New England could have reliability problems this winter is because generators have the choice to use gas to generate electricity or sell it back into the market based on economics. That’s a great deal for consumers. With deals like that as well as the monumental costs of running Van Welie’s outfit and the other ISOs across the country, I doubt if competition will bring any savings to consumers.

Jim Lundrigan, New Haven, Conn.

The Author Responds: Not only is Mr. Lundrigan’s letter misleading, it also misrepresents what is happening in New England. New England’s wholesale market has grown to $7.25 billion in annual transactions in a short period of time. And while approximately 20 to 25 percent of the region’s electricity is sold through the day-ahead and real-time “spot” markets, the bilateral contracts he mentions are rooted in wholesale prices. Moreover, wholesale markets provide value: A recent report by Cambridge Energy Research Associates found that, in the past seven years, U.S. residential consumers paid $34 billion less for electricity than they would have paid if traditional regulation had remained in place.

Mr. Lundrigan blames ISO New England for the region’s growing reliance on natural gas to produce electricity, but we have no authority over siting decisions. This trend—which we issued warnings about as early as January 2001—is the result of well-intentioned state environmental policies that encouraged the development of cleaner power. We have been out front in calling for a diversification of the region’s power sources.

ISO New England’s management of the power system has resulted in significant investment in new power plants, market systems, information, technology, and critically needed transmission projects. This has resulted in a more reliable, economical, and environmentally friendly power system.

The total value of the services we have provided and the resulting savings far exceed our operating costs, which have been approved every year by the region’s stakeholders. We will continue to build a power system to meet the region’s current and future electricity needs and do so in