Electric grid eyed for N.E., Canada Regional leaders seek joint venture

MONTPELIER, Vt. – New England governors and eastern Canadian premiers agreed Tuesday to pursue a possible joining of electric systems amid growing opposition to a proposed merger between New England and New York.

The leaders asked a committee already set up to deal with cross-border energy issues to “explore solutions for a better managing network, including, as one possibility, the establishment of a regional transmission organization,” according to a transcript provided by the office of New Hampshire Gov. Jeanne Shaheen.

The resolution passed at the regional leaders’ annual conference in Quebec came amid growing opposition in New England to the planned merger of the organizations that act as electricity traffic cops in New England and New York.

Shaheen and Vermont Gov. Howard Dean on Tuesday echoed concerns voiced earlier by Massachusetts Attorney General Thomas Reilly that the proposed merger between the New York Independent System Operator and ISO New England would raise electric rates in New England while saving New Yorkers money.

“We think it needs to be slowed down and needs further study,” Shaheen said in a telephone interview. “There are a lot of questions that need to be answered.”

Dean said the committee that will study the possible merger between New England and the eastern provinces – the Northeast International Committee on Energy, or NICE – is to report back to the governors and premiers in a year.

He said the proposed New England-New York merger, which now is under review at the Federal Energy Regulatory Commission, was put together under pressure from FERC, which he said has been pushing for larger power marketing regions on the grounds that they’ll create greater efficiencies.

ISO New England spokeswoman Ellen Foley said she had not seen the Quebec resolution and could not comment on it. She said the New England and New York ISOs were convinced the merger was a good idea. A spokesman for the New York ISO could not immediately be reached.

Richard Sedano, a former Vermont public service commissioner, energy consultant and member of a committee that advises the ISO New England board, said the theory behind such mergers is that “in the long run the sharing of resources should drive down costs everywhere.”

But Sedano agreed with critics’ concern that New York stands to benefit and New England to lose at least for the first several years after such a combination. Sedano said that’s because New York gets a significant amount of power from “base-load” sources in New England – generators that are relatively inexpensive and are designed to run all the time.

New England gets power from New York mainly in “peak-load” periods, when New York generators that run more expensively and run less often are fired up. The concern is that a merger of the New York and New England power grids could allow New York to take more base-load power, driving up its cost by driving up demand.

A study by the two system operators earlier this year took a snapshot of electric market projections for 2005 and said merging the two markets would save New York ratepayers $282 million that year while driving up New England’s power costs by $62 million.

Foley countered that the study also showed the economic impacts evening out by 2010. And she said that as part of their filing at the FERC, the two ISOs had promised to work to lessen any economic disparities.

Dean said he was particularly annoyed that the New England and New York ISOs had gone ahead and filed their merger plan with the FERC without putting it before the region’s state utility commissions first. “They never consulted the states and they had no intention of consulting the states.”

The Vermont Democrat, who has not formally declared his candidacy for president in 2004 but has been traveling the country and campaigning hard, charged that the FERC process typified a Bush administration attitude of “When you want to do something, never mind what the states say, just go ahead and do it.”

“I’m sick of being pushed around by the federal government, particularly when our consumers are paying the bill,” he said.