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To: mishedlo who wrote (224775)	3/2/2003 10:47:16 AM
From: JHP	Respond to of 436258

New Enland just went from one region to a 8 region utility plan to deregulate,expect a LLCF this summer: Reilly: Electricity plan could cost public By Peter J. Howe, Globe Staff, 2/5/2003 Massachusetts Attorney General Thomas F. Reilly yesterday urged the overseers of New England's electric grid to back off from plans to launch a new wholesale market system March 1, saying Greater Boston businesses and consumers could be socked with huge, unfair rate increases. The board of directors of Independent System Operator, the Holyoke-based organization that runs the power grid and wholesale market, is set to vote tomorrow on the new system. In one key concession, however, ISO-New England has backed away from plans to immediately use a controversial pricing system in Greater Boston and Connecticut when it launches the new wholesale market. Instead, it will launch the market regionally while continuing to seek federal approval for the specific Boston-Connecticut price plan, which is called a designated congestion area system. The plan calls for replacing a single wholesale electric market price for all of New England with a system of eight regional prices, including three zones in Massachusetts and statewide prices for the five other states. It is intended to send clearer ''price signals'' about where new power plants and high-voltage transmission lines are most needed to reduce obstacles to the efficient flow of the cheapest power available. Preliminary ISO estimates suggest wholesale power prices in Greater Boston could rise by up to 14 percent, which could over time lead to utility rate increases for businesses and consumers, although they might drop in other parts of New England. Siding with NStar Electric and other power companies that call the plans unfair to Greater Boston, Reilly said, ''Now is clearly not the time to burden consumers with more costs that are beyond their control or to venture heedlessly into the uncharted waters of [the new] market design,'' which is being pushed nationally by Bush administration energy officials. Reilly said he is concerned that a single company, Philadelphia-based Exelon Corp., would by summer control 71 percent of electric-generating capacity in Greater Boston and could use monopoly power to gouge consumers. Exelon, which owns big plants in Everett, South Boston, and Weymouth, expects to start up a new 1,600-megawatt unit in Everett in April or May. Even if the new market plan created economic incentives to build more power plants close to Boston, Reilly said, ''the same generator owns virtually all of the sites in that market.'' Exelon would actually have financial incentives not to build generators, because that could reduce its profits, Reilly said, defeating the purpose of the new market. ISO spokeswoman Ellen M. Foley said her organization continues to believe the new market would be fair and would reduce unfair subsidies paid by consumers in areas such as Maine and Rhode Island for premium-priced electricity in Boston. Foley said the ISO board ''is taking into consideration comments from all our customers.'' John D. O'Brien Jr., Exelon's northeastern vice president of government affairs, said his company supports the new market plan. ''This debate should be about more than just generation,'' he said. In reacting to possibly higher wholesale prices in Greater Boston, O'Brien said ''there are transmission and distribution system improvement solutions, as well as conservation solutions'' that would benefit from Boston-specific market price signals. Kristin Domanski, an analyst with ESAI, which provides consulting for utilities and energy companies, said her Wakefield firm estimates wholesale electric prices will be $4 to $5 per megawatt-hour higher in Greater Boston than the New England baseline once the new system is launched -- about 10 percent higher than normal prices during periods of normal demand. But Domanski said ISO-New England has created a ''market-friendly'' system of financial hedging devices that could offset some of those premiums for utilities like NStar. ''The market signals that are going to be sent are going to be virtually useless'' in Greater Boston, said Eugene J. Sullivan Jr., a Democratic member of the board of the Massachusetts Department of Telecommunications and Energy. ''With all these questions out there, maybe it is time we took another look'' and reconsidered moving ahead with the plan, he said. Peter J. Howe can be reached at howe@globe.com. This story ran on page C2 of the Boston Globe on 2/5/2003. © Copyright 2003 Globe Newspaper Company.