PORTLAND, Maine – The Federal Energy Regulatory Commission proposes to change
the way the generation, marketing and distribution of electricity is handled in
the Northeast, and an Augusta energy attorney says that new system may cost
consumers in the long run.
"What we have is a federal agency deciding it can
do by decree what it does not know can be done wisely or well," said Tony
Buxton, an Augusta energy attorney representing a group of Maine electricity
consumers, in addition to the Maine Public Advocate's Office, the Attorney
General of Massachusetts, the New Hampshire Office of Consumer Advocate, the
Connecticut Office of Consumer Council, The Energy Council of Rhode Island and
The Energy Consortium.
Buxton said the order by FERC last month essentially will do away with the
existing system controlling electricity sales and distribution in the New
England Power Pool (NEPOOL) and opens the door for huge industrial power
conglomerates to control both pricing and power supplies that affect Maine
business economies, electricity costs and ultimately jobs.
FERC proposes to
replace NEPOOL and a related system operator, ISO-New England, with what's being
called a "Super RTO" (Regional Transmission Organization), which is composed of
three smaller regional groups between Maine and Maryland, including NEPOOL and
ISO-New England. Other similar electricity grid networks throughout the nation
would be combined into just four grid districts under the FERC order.
While FERC justified its order of July 12, saying the new system aims for a
more organized network, Buxton said that new system imposes several changes that
wrests away New England consumers' ability to have a say in power pricing and
sales and distribution policies.
Though rife with complex and eye-glazing
technical details, the conflict breaks down to two main teams. Consumers of
electricity who pay for it and state officials charged with looking out for
consumers' interests are on one team, and power producers, sellers and
distributors who profit from high electricity prices sit on the
other.
Currently, consumers as well as generators and distributors of
electricity are members of NEPOOL and vote on power distribution and marketing
issues. The new Super RTO, covering territory from Maine to Maryland and
including 70 million business, industrial and residential power consumers, will
not extend voting rights to NEPOOL members.
In addition, Buxton said, the
Super RTO lumps Maine and other New England power users into the same massive
system serving giant metropolitan areas, including New York, Philadelphia and
Washington, D.C. Everyone within the new district will be treated the same way
and could be charged the same amount for power delivery, regardless of regional
differences in systems. For instance, if it costs more to supply major
metropolitan areas like New York City with electricity, consumers in Maine would
shoulder the extra costs even though providing power to Maine might be far less
expensive.
Worse, said Buxton, FERC said that the new four-RTO system must be designed
within 45 days, an implausible task given the complexity of the issues involved
and the huge number of players. "Even the original 13 colonies that created the
United States required more than 45 days to establish," he said, noting that the
proposed Northeast RTO comprises almost all states that were the original 13
colonies.
"Ironically, Buxton added, the premise upon which the 13 colonies were
founded included the rule of "no taxation without representation." The new
FERC order establishes a system under which New England ratepayers, both
industrial and residential, will be charged for distribution of electricity but
will have no say at all in the creation of system rules, standards or operation
which affect prices passed along to consumers.
"In this, they've taken away our representation," Buxton said.
Buxton's
law firm, Preti, Flaherty, Beliveau, Pachios & Haley, LLC, in Portland,
Augusta, Bath and Concord, N.H., on Aug. 13 filed a request for FERC to
reconsider its order and hold a rehearing on the proposal. Aside from his
objection to obvious issues – the deprivation of Maine electricity consumers'
right to vote on power policy issues – Buxton said FERC has ordered the creation
of four new consolidated power grid districts with no study or analysis of
potential problems. It would become the second largest power grid system in the
world, with no fundamental studies showing how or whether it would work, he
said.
Buxton worries that New England states and the Maine consumers group he
represents, the Industrial Energy Consumer Group (IECG), which includes Gardiner
Paperboard, Forester, Inc. (formerly a leading manufacturer of toothpicks and
croquette sets), National Semiconductor, International Paper and Georgia
Pacific, will become victim to rising electricity rates over which neither they
nor state government regulators have any control.
Among the unknowns are how
New England will be affected by possible power shortages in New York,
Philadelphia or Washington.
"We're dealing with grid reliability," Buxton said. "After California, we
should be very careful."
Pricing, also, has been reined in under the existing NEPOOL system, according
to Buxton. Prices in New England reached a peak of 10 cents per kilowatt-hour
this summer and hit $60 per kilowatt-hour in California, where consumers have
had no say in power policies.
Further complicating the matter is the fact that the chairman of FERC, a
political appointee, is stepping down to be replaced by a Bush Administration
appointee, which likely will change the complexion of FERC. The FERC vote
ordering the new four-RTO structure was a split vote, 3-2. The new FERC chairman
could tip FERC's position in the other direction, according to Buxton.
"I call it a commission in chaos," he said. "We're going to have a major
fight. It'll be interesting to see if the Bush Administration comes down in
favor of democracy or bureaucracy."
Buxton expects FERC will decide whether to rehear the matter in the next
month or so.
Preti Flaherty has offices in Portland, Bath and Augusta, Maine, Concord, NH and Boston, MA. With more than 80 attorneys, the firm counsels clients in the areas of business law, energy, environmental, estate planning, health care, intellectual property, labor and employment, legislative and regulatory, litigation, technology and telecommunications.
