Power to the People is a column by D. Maurice Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.
By D. MAURICE KREIS, Power to the People
New England does not exist.
Sure, if you look on a map you will see that we are part of a region that, by general agreement, consists of four of the original thirteen colonies (in alphabetical order, Connecticut, Massachusetts, New Hampshire, and Rhode Island), one formerly independent republic (Vermont), and the cooler half of the Missouri Compromise (Maine, admitted in 1820). But unlike those political entities, New England has no legal existence whatsoever.
Not that there’s anything wrong with that – unless, of course, you’re an electric customer. Then you should get nervous.
The reason is something known in the electricity business as “resource adequacy.” It’s a buzzword that means, essentially, that we electricity users can and should expect there to be enough power to meet everyone’s needs, not just most of the time but all of the time. Back in the good old days – i.e., before 1999 — resource adequacy was the responsibility of state government.
Along came the deregulatory craze, which New Hampshire officially embraced in 1996. Five of the region’s states – all but Vermont – opted to restructure their electric utilities by requiring them to sell off their generation facilities and, in theory, allowing market competition to work its magic at both the retail and wholesale levels.
I’ve already written about why retail competition has failed most residential customers. Today’s focus is on what happens at wholesale. The region’s six states have ceded their responsibility for resource adequacy to an independent organization – ISO New England, the Massachusetts-based nonprofit entity that runs the electricity grid from Cos Cob to Quoddy Head and from Moosehead Lake to Martha’s Vineyard.
Not that there’s anything wrong with that – except that ISO New England is federally regulated and, therefore, not accountable to the states.
In October we learned that the states have had enough. That’s when two documents came pouring out of an obscure organization called NESCOE – the New England States Committee on Electricity. NESCOE exists for one reason: to beg ISO New England to do stuff (or barring that, to demand that federal regulators force ISO New England to do stuff) that the states want.
What do they want? Well, on October 14 NESCOE issued a clarion call for wholesale electricity markets that are designed to create a “decarbonized grid capable of supporting the accelerated adoption of more sustainable electric heating, and transportation solutions for families and businesses.”
At the time, much was made in some circles of the fact that only five of the New England governors signed the statement. Absent was the signature of the Granite State’s chief executive, Governor Christopher T. Sununu.
Criticism of the Governor for not signing isn’t really fair. Unique among New England states, New Hampshire has no decarbonization goal enshrined in statute. And, as the NESCOE document issued two days later makes clear, the other five governors’ statement was less about promoting decarbonization and more about demanding that ISO New England stop thwarting the achievement of state-law objectives.
In the wake of the governors’ statement, NESCOE put out a big “vision” document on behalf of all six governors, demanding a “new, regionally based market framework” – one that not just maintains the current reliable electric service but also “account[s] for and support[s] States’ clean energy laws in an efficient and affordable manner.”
What they heck are they really talking about? Here’s what.
Right now the market rules are jiggered so that producers of renewable energy – which, it is alleged, are subsidized via state laws that require decarbonization – can’t use those subsidies to under-bid their fossil and nuclear competitors in the regional market. All of this is hiding in not-so-plain sight via obscure ISO New England abbreviations like MOPR (“minimum offer price rule”) and CASPR (“competitive auctions with sponsored policy resources”).
In April, feisty Commissioner Richard Glick of the Federal Energy Regulatory Commission called his agency’s approval of a similar MOPR (the one used by the nation’s biggest grid operator, PJM) “illegal, illogical, and truly bad public policy.” Among other things, he accused his fellow FERC commissioners of usurping state authority.
With that in mind, you can understand why NESCOE, representing New England’s governors, would be storming the ISO New England bastille with torches and pitchforks. We should join them, fellow ratepayers!
We should do that even though we’re New Hampshire and can’t stand with our neighbors in arguing that we’re paying twice for decarbonization, once via state-mandated support and then again via the regional wholesale market. We pay the same wholesale prices as the rest of New England – so, when these prices are artificially nudged upward via mechanisms like the MOPR, it’s an incursion on our wallets too.
Laudably, NESCOE is calling for big changes to the way in ISO New England is governed. A “lack of transparency and accountability in ISO-NE’s governance structure undermines public confidence,” NESCOE declared. The states are demanding reforms to the way ISO New England’s board is chosen and in the way the Board operates – i.e., in secret.
“[T]he States are open to models that could be implemented under state jurisdictional authority,” said NESCOE. That’s a polite way of saying that the states just might blow the entire system up and resume overseeing resource adequacy themselves, as federal law allows them to do.
I have another idea to throw onto the pile.
Right now, we are all paying for NESCOE. It’s actually funded by ISO New England, which ultimately passes its costs along to – guess who? – ratepayers, via their retail electricity bills. How about a similar ratepayer-funded organization to represent the interests of those ratepayers directly?
There is such an organization at PJM, the grid operator that is the counterpart to ISO New England across a vast swath of the Midwest and mid-Atlantic regions. It could make a big difference in New England.
Right now, all we ratepayers have is ISO New England’s “Consumer Liaison Group” (CLG) on whose coordinating council I serve. Basically, the CLG is a glorified coffee klatch – a forum for the dissemination of PowerPoint slides from ISO New England’s public affairs staff.
NESCOE is right. We need more than that. We need a revolution.