April 29, 2002 — New England’s electric power supplies are projected to be adequate to handle demand this summer, but several unexpected events could result in localized problems that could lead to tight power supply situations, ISO New England Inc., operator of the region’s electric power grid, announced today in its annual summer forecast.

To hedge against these unexpected events, ISO New England is implementing practical strategies to reduce electrical demand this summer, including a conservation program that provides financial incentives for large commercial users to reduce their power consumption during periods of high demand.

“Since the deregulated wholesale power marketplace opened in 1999, New England has added more than 4,000 megawatts (MW) of new generating capacity, bringing the total available to more than 28,000 MW. This provides a solid foundation for meeting the region’s energy needs,” said Stephen G. Whitley, ISO New England’s senior vice president and chief operating officer. “However, we still face several challenges: We need regular imports of power from Canada to ensure we have adequate supply, and we need to address transmission congestion that could cause capacity deficiencies in southwest Connecticut and Boston.”

Challenges this summer could include:

* An extended heat wave that could strain supplies and burden the transmission system;
* Localized transmission bottlenecks in southwest Connecticut and metropolitan Boston that could prevent available power from being transported to where it is needed;
* Drought conditions that could affect the generation of power; and
* Ensuring historical levels of imports from Canada, which are contingent upon the execution of new contracts.

Whitley said that long-term contracts for power imported from Quebec expired last year and have been replaced by a number of smaller, shorter-term contracts. Approximately 1,700 MW can be imported from Quebec to New England. While ISO New England expects that this power will be available, that is contingent upon wholesale power marketers executing contracts.

Constraints on the transmission system represent another major challenge. Most of the region’s new power plants are located outside areas of high demand, such as southwest Connecticut and greater Boston, and the transmission systems serving these areas are often inadequate.

Southwest Connecticut has one of the nation’s most severe reliability problems. The situation is so acute that the loss of a major transmission facility or power plant in southwest Connecticut could lead to the disruption of electricity supplies. Similar, but less severe, constraints could occasionally affect the Boston area.

The failure of transmission lines near Stratford, Connecticut on a moderately hot day last summer nearly resulted in blackouts that were averted only through an emergency dispatch of power from Long Island. Conversely, several hundred megawatts of generation were “locked in” in Maine during a heat wave last summer and unavailable for delivery to the rest of New England.

“Electricity supplies have outpaced demand here in New England, but it’s also a matter of location, location, location,” said Whitley. “Until more improvements are made to the region’s transmission system, ISO New England will have to carefully manage power system operations during peak demand periods this summer and for the next few years.”

Other factors that could exacerbate this summer’s power situation include seasonal power plant maintenance overruns and forced outages at power plants and transmission substations. In addition, if drought conditions persist, water supplies to power plants could limit their output. Any one of these reasons, coupled with periods of very hot and humid weather, could require consumers to conserve electricity for short periods of time this summer. Historically, public appeals to conserve electricity have proved beneficial in helping balance supply and demand on the region’s bulk power system.

To further reduce power use during peak demand periods, ISO New England has expanded the Load Response Program, which provides medium-to-large commercial users with financial incentives to curtail their consumption of electricity during peak demand periods. In addition to the standard incentives, large users in transmission-congested areas of Boston, southwest Connecticut and Vermont will receive bonus incentives to participate. In addition, to supplement the load response program in southwest Connecticut, 80 MW of demand reductions and temporary generation has been contracted to help alleviate the demand in that transmission-congested area.

Based on historical weather and electricity use data, summer peak demand is expected to reach 24,200 megawatts (MW) on at least one day this summer under assumed normal weather conditions. An extended heat wave could drive peak electrical demand to 25,500 MW. The current record is 24,967 MW, set on August 9, 2001. New England’s summer electricity use typically ranges between 19,000 MW and 23,000 MW. In addition, ISO New England maintains a reserve of at least 1,700 MW to cover unexpected power plant or transmission line outages.

ISO New England Inc. is the not-for-profit corporation responsible for the day-to-day reliable operation of New England’s bulk generation and transmission systems with an installed capacity of more than 28,000 megawatts. In addition to operating the bulk power grid, ISO New England is the administrator of the region’s wholesale electricity marketplace and the Open Access Transmission Tariff on behalf of the New England Power Pool.