On Wednesday, April 16, a number of NEPPA members and their key staff plan to meet with the Government Accountability Office (GAO), an independent arm of Congress, to address questions regarding wholesale competitive markets and whether consumers are benefiting in New England. The meeting is a result of an investigation sought by Chairman of the Homeland Security and Governmental Affair Committee, Sen. Joe Lieberman (I-CT), and Ranking Member Susan Collins (R-ME) in May 2007. The Senators requesting an investigation into the costs and operational structures of regional transmission organization (RTOs) and independent system operators (ISOs) to examine if they have brought the intended benefits to consumers.
In their May 21, 2007 letter to GAO Lieberman and Collins said, "We are writing now out of concern that ISOs and RTOs might not be living up to their full potential with respect to improving efficiencies and reducing costs, and might not have adequate incentives to minimize costs." Calling RTOs and ISOs "effective monopolies" within their geographic boundaries, Lieberman and Collins said there are concerns that "the lack of competitive pressure, which otherwise could help constrain ISO and RTO costs, result in rates that are higher than necessary."
As a result of the request, GAO is reaching out to representatives of each RTO/ISO sector and of other interested groups in ISO-New England (ISO-NE). The scope of its review will focus on three objectives 1) key ISO and RTO operational costs and investments in property, plant, and equipment, (2) how ISOs, RTOs, and FERC review ISO and RTO costs, and (3) how FERC and others have estimated the benefits of ISOs and RTOs. In exploring these objectives, GAO plans to meet with stakeholder groups from two RTOs - the Midwest Independent System Operator (MISO) and ISO-NE.
GAO plans to issue its report in September 2008.
In 2007, NEPPA members, particularly MMWEC, CMEEC and Kennebunk Light and Power District, worked closely with these two Senate offices prior to the issuance of the GAO request. These public power systems, along with other NEPPA members, have consistently expressed concerns about the escalating costs associated with market design mechanisms and the RTO governance structure.