December 24, 2024
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Electrical grid proposal may affect power rates Extra capacity costs could go into effect July 1

BOSTON – The operators of the region’s electricity grid recommended Monday that consumers pay extra to ensure that New England has enough electricity generation capacity.

Federal regulators had ordered the new charge in December – even though New England now has plenty of generation capacity – but a court challenge has kept it from being implemented.

The payment requires companies that buy electricity from generators to pay those generators to maintain enough extra capacity in order to accommodate peak demand.

If the companies don’t pay enough for extra capacity, they are fined.

ISO New England, which operates the grid, said Monday the fine should range from $3 to $4.87 per kilowatt-month – much lower than the $8.75 recommended by federal regulators but considerably higher than the 17 cents that has been in effect.

ISO spokeswoman Ellen Foley said companies would start at the $4.87 rate, and the penalty would decline by 20 percent each month to the $3 limit for each month they met state standards.

The rate would go into effect July 1, if approved by federal regulators.

“This is to ensure the overall reliability of the bulk power system here in New England,” Foley said.

It’s unclear how Monday’s decision would affect customer rates, if federal regulators approve it.

Each state maintains a different regulatory structure, and in some states, consumers have already been paying such “Installed Capacity” charges, even before the deregulation of the electrical industries in recent years.


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