RTO proposals face off before FERC

PORTLAND, Maine, and ALBANY, N.Y., March 13, 2002 — In a filing with the Federal Energy Regulatory Commission (FERC), Energy East Corp. today stepped up its support of a Northeast Regional Transmission Organization (RTO) that would encompass the regions currently served by the PJM Interconnection, LLC (PJM), the New York Independent System Operator (NYISO) and ISO-New England.

In today’s filing, NYSEG (New York State Electric & Gas Corporation) and CMP (Central Maine Power), wholly-owned subsidiaries of Energy East, joined with Rochester Gas & Electric Corporation, to call on FERC to stay the course set in orders issued on July 12, 2001 to create one RTO for all three regions — PJM, NYISO and ISO-New England. The companies said the three-ISO RTO would:

* Draw from the best that all three ISOs have to offer.
* Yield greater reliability, competition, market liquidity and economies of scale.

“A three-region RTO is a tremendous opportunity to provide consumers benefits. FERC should not let this opportunity slip away,” said Denis Wickham, senior vice president at Energy East.

“The intermediate — and long-term benefits of a three-region RTO are crystal clear,” Wickham said. “With FERC’s leadership, interested parties need to focus on the benefits of a larger RTO and the transitional tools needed to eliminate the concerns about short-term winners and losers. We are convinced that consumers in the Northeast will ultimately benefit from lower costs, enhanced competition and increased reliability with a PJM-New York-New England RTO.”

The companies’ filing demonstrates that a smaller RTO made up of just New York and New England will not produce the same benefits as a three-region RTO and the associated transition would be risky. “Major systems at the NYISO must be replaced because they are based on outdated technology. New England has already turned to PJM for assistance in developing a congestion management system,” Wickham said.

The companies’ filing concludes that the current effort by NYISO and ISO-New England to form a two-region RTO, which also requires approval of the transmission owners, will not maximize benefits for customers.

About Energy East: Energy East Corp. is a super-regional energy services and delivery company serving 2 million customers (1.4 million electricity and 600,000 natural gas) in upstate New York and New England over a 32,000-square-mile service area. On February 20, 2001, Energy East announced a strategic combination with RGS Energy Group, the parent company of Rochester Gas & Electric Corporation.

The combined company will be one of the largest, most diversified energy providers in the Northeast, servicing half of upstate New York and nearly 3 million customers, including approximately 1.8 million electricity customers, almost one million natural gas customers and approximately 200,000 other retail energy customers.

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