On Tuesday, February 6, a bipartisan group of seven New England (NE) Senators sent a strong letter to FERC Chairman Joe Kelliher, urging the Commission to reconsider and reverse its approval of the 100 basis point incentive "adder" at issue in a pending New England case (Order No 489). The letter was signed by Sens. Joe Lieberman (I-CT), Olympia Snowe (R-ME), Bernie Sanders (I-VT), Edward Kennedy (D-MA), John Kerry (D-MA), Christopher Dodd (D-CT) and Susan Collins (R-ME). Upon learning of the letter, National Grid and Northeast Utilities (NU) met with a number of Senate offices before it was sent to try to discourage their support. In the letter, the Senators commended FERC on changes made in its national rulemaking on incentive rates (Order 679-A). They applauded the added consumer protection provision which "set forth a stringent ‘nexus' test under which the incentive proponents must show the relationship between requested transmission incentives and demonstrated risks and challenges facing transmission owners in building proposed transmission facilities."
The Senators told FERC, "We believe reversal would provide ‘substantive parity' for New England electric consumers, who deserve to benefit equally with all other consumers in the country from the Commission's decision to enhance the consumer protections in the transmission incentive rule."
National Grid and NU told the Senate offices that compliance with FERC's national rulemaking that it would further delay transmission construction and result in higher congestions cost and electricity prices in the region. They also pointed to the MISO region and indicated that the incentives approved in that region were even higher than what the NE transmission owners requested. Some Senators seemed swayed by these arguments and did not sign the letter.
NEPPA members estimate that the impact on consumers if the 1% adder remains in effect would be an added $27 million per year by 2011 (based on transmission projects already approved in the ISO's 2006 Regional System Plan.) On a cumulative basis, between 2005 and 2011, consumers will pay an additional $115 million.