For more information contact:
Donald Sipe
dsipe@preti.com

Augusta, ME – A newly created four-state coalition of major electricity users that includes manufacturers, paper mills, municipalities, ski areas, supermarkets, utilities and even universities says the rules governing the New England Power Pool are unfair, "dysfunctional" and should be changed immediately.

The Consumers of New England late last week petitioned the Federal Energy Regulatory Commission (FERC), seeking the immediate reform of the internal rules of New England Power Pool (NEPOOL). NEPOOL is an organization of representatives from various sectors of the New England electricity business – including generators, traders, transmission companies, municipal utilities and end-use consumers – who are responsible for governing the distribution of electricity in New England markets.
NEPOOL members sometimes have competing interests and the proposed changes seek to level the field for members making decisions that affect the availability and distribution, and ultimately the price, of electricity.
The consumers group, led by a Maine-based trade association, the Industrial Energy Consumers Group (IECG), maintains that current rules of operation within NEPOOL currently allow individual members too much power to dominate NEPOOL decision-making, and stymie market reforms and changes necessary to make the New England electricity market competitive and efficient – an important issue for businesses and organizations in Maine, Massachusetts, New Hampshire and Rhode Island.
If the group prevails before FERC, the sale of electricity throughout New England should become more efficient and thus less expensive for residential, commercial and industrial power users. The groups and organizations that joined the filing are composed of representatives of more than 1,000 individual companies, organizations, institutions, universities and manufacturers representing several hundred thousand employees throughout New England.
"As a group, the petitioners come to the commission (FERC) with one voice," the petition states.
A 64-page companion document also filed with FERC notes that while electricity consumers once may have been "passive and uncomprehending purchasers of monopoly services," they now are "increasingly active, well-informed and supportive participants in (FERC's) efforts to bring real competition to the electric markets. In increasing numbers, consumers in the New England market are recognizing that their knowledge of and participation in the formation of the rules and structures which govern the transactions vital to their economic interests is a necessary component of making competition work."

Augusta attorney Donald Sipe, who is vice chair of NEPOOL for the end use sector and legal counsel to the IECG, said certain rules governing how NEPOOL makes decisions have long been recognized as dysfunctional. 
"The items we have complained to the FERC about have not been a secret to anyone," said Sipe from the Augusta offices of Preti, Flaherty, Beliveau, Pachios & Haley, LLC. "Rules such as the 'automatic stay,' which allow a single member of NEPOOL to hold up any proposal with which they disagree, are a recipe for gridlock in an organization with over 100 members each with differing interests."
Sipe said that under such circumstances, he is amazed that NEPOOL "has managed to accomplish anything at all, let alone many of the landmark restructuring issues that have been successfully implemented in establishing the current markets." 

Sipe emphasized that if progress is to keep pace with consumer demands for greater competition and lower prices, the efficiency and timeliness of decision-making in NEPOOL must be improved.
"Consumers are finding themselves increasingly exposed to the realities of unregulated power costs," Sipe said. "Prices that were once disciplined by regulation are now supposed to be disciplined by competition. The problem facing consumers is that until NEPOOL market rules are revised, the necessary discipline does not exist."
In spite of the changes that the Consumers of New England are urging FERC to accept, Sipe noted that electricity markets "are heading in the right direction."
"There have been significant positive steps," he said. "But, suppliers in the market have demonstrated great resourcefulness in exploiting remaining flaws in the market to increase profits at consumers' expense. The rules need to be developed and implemented in a more timely fashion, and be able to change more quickly in response to consumers' needs as the market develops.  Otherwise, competition will not bring consumers the benefits so often promised."
The complaint filed on behalf of The Consumers of New England requests that FERC make four changes to the NEPOOL governance. Sipe said the changes would allow the majority of NEPOOL members to act more quickly in bringing market reforms to FERC.
The changes would reduce a majority vote from 66.7 percent to 60 percent, eliminate an automatic appeal for unsuccessful votes, and two others of a more technical nature.

"We believe there is immense value in having a participatory process like NEPOOL where all sectors of the economy can exchange views, engage in constructive negotiation and attempt to reach consensus," Sipe said. "The proposals that result always are more thoroughly thought out and less likely to have unexpected, unwanted consequences for consumers when this is done.  But if that process becomes so slow and torturous that needed suggestions do not even make it to the commission for review, then consumers are not going to get the benefits of competition."

The Consumers of New England, who joined in the unprecedented filing, include The Industrial Energy Consumers Group, Maine's Public Advocate Stephen Ward, The Energy Council of Rhode Island, The Energy Consortium, Ski Maine, Shaw's Supermarkets Inc., International Paper, Northeastern University, The Mead Corporation, National Semiconductor, The Chinet Company, Forster, Inc., Gardiner Paperboard, Georgia-Pacific, Wausau-Mosinee Paper Corporation, Portland Pipeline, The Maine Electric Consumer Cooperative, Competitive Energy Services.

The consortium filed its complaint on Feb. 22. A decision by FERC on the matter could be weeks or months away, according to Sipe.