October 15, 2020

CT leads New England charge to overhaul electricity market structure

CT leads New England charge to overhaul electricity market structure

After initiating a broad overhaul of its regulation of utilities, Connecticut has recruited four New England states to rework the regional grid that is overseen by ISO New England, the independent system operator charged with ensuring a reliable supply of electricity.

In a written statement Thursday morning, Gov. Ned Lamont said the current structure “has actively hindered” states’ efforts to phase out polluting power plants in favor of renewable sources like wind turbines and solar panels, while increasing costs “to fix market design failures” in his words. Lamont’s energy policy chief Katie Dykes has emerged as a vocal critic of ISO New England’s structure and priorities, in her role as commissioner of the Connecticut Department of Energy and Environmental Protection.

Lamont and his counterparts in Massachusetts, Rhode Island, Vermont and Maine plan to release a “vision document” in their words this week through the New England States Committee on Electricity. Lamont’s statement made no mention of New Hampshire, which obtains electricity through the wholesale markets managed by ISO New England.

ISO New England spokesperson Matt Kakley indicated the organization will “engage with the states and our stakeholders” on the governors’ proposal, in a Thursday email response to a query. He did not elaborate on any immediate opportunities or challenges inherent in the governors’ proposal.

“Maintaining reliable, competitively-priced electricity through the clean energy transition will require broad collaboration,” Kakley stated. “The common vision of the New England governors will play an important role in the discussions currently underway on the future of the grid.”

ISO New England launched operations in 1999, running auctions through which power plant operators can bid to supply electricity, including against long-term projections for future needs that can only be met through the construction or installation of new sources of supply.

Run as a nonprofit, ISO New England falls under the jurisdiction of the Federal Energy Regulatory Commission rather than the states whose electricity supplies it is charged with ensuring. That has led to pointed criticism from Dykes and others that ISO New England is out of touch with the push by states to switch to cleaner generating electricity.

The six New England states participate in the Regional Greenhouse Gas Initiative that caps carbon emissions by individual power plants, while allowing them to purchase unused allowances from each other with that revenue funneled to the states to support renewable energy and conservation programs. FERC is now considering the concept of carbon pricing, which would levy a tax on power plants based on their emissions.

Connecticut’s issues with ISO New England boiled over this summer on the heels of a power-purchase agreement between the Millstone nuclear power plant and transmission grid operators Eversource and United Illuminating, which contributed to a sharp increase in customer bills.

A few weeks ago, Lamont signed into law a “Take Back the Grid” act that allows the Connecticut Public Utilities Regulatory Authority to factor in Eversource’s and Avangrid’s past performance in maintaining electric reliability, in addition to any future needs for revenue based on needed upgrades. The law included an element for Connecticut to initiate a study of ISO New England’s role.

PURA is collecting industry input on modernization proposals that would add up to hundreds of millions of dollars, including “smart” meters at homes and businesses to help electricity customers better manage their power use; and utility-scale batteries to store power generated by solar panels and offshore wind farms.

Alex.Soule@scni.com; 203-842-2545; @casoulman

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