On March 21, Federal Energy Regulatory Commission (FERC) Chairman, Joseph Kelliher sent a letter to Senator John Kerry (D-MA) in response to a February 6, 2007 letter from seven New England Senators regarding incentive rates for transmission owners in New England. In the letter, Kelliher acknowledged Kerry's request for FERC to apply Order No. 679, (national transmission incentive rule) to transmission projects in New England and stated that FERC recently approved that request. Kelliher said that the Commission also "reaffirmed our prior approval of a 100 basis point ROE incentive for existing ISO New England regional transmission expansion plan approved projects that come on line by December 31, 2008." Following that date, new projects must justify receiving incentives on a project-by-project basis, the letter read.
On March 24, 2008 FERC acted on New England's transmission incentive rate case, and reversed, in part, the action it initially took in the NE case, as the New England Senators requested. In the recent decision , FERC agreed to "split the baby" on the 100-basis point adder, allowing transmission owners the additional 100 basis point adder for existing transmission projects (expected to be completed or come on line by 12/08.) However, for transmission projects going forward, FERC will use the criteria outlined in the "national" rule (Order No. 679‑A), for assessing whether the additional 100-basis point should be granted. The latter position was what the New England Senators' letter requested.
In 2007, NEPPA members, worked with the Congressional delegation to inform them of concerns that New England electric consumers could be disadvantaged if FERC did not reverse it's position with regard to NE incentives rates for transmission owners. The outcome is positive for New England consumers, and is proof that the Senators' active oversight of FERC and ISO-NE activities is, in fact, having a real impact.
In 2007, National Grid and Northeast Utilities (NU) told the Senate offices that compliance with FERC's national rulemaking would further delay transmission construction and result in higher congestions cost and electricity prices in the region. Some Senators were swayed by these arguments and did not sign the February 6, 2007 letter. The original 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).
At that time, NEPPA members estimated that the impact on consumers, if the 1% adder remained 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 would have paid an additional $115 million.
To review a copy of the FERC letter to Sen. Kerry, please contact Lori Pickford at Morgan Meguire at lpickford@morganmeguire.com or call 202-661-6196.