A proposed merger of wholesale electricity markets in New York and New England doesn’t go far enough to reduce the high cost of sharing power with mid- Atlantic states, federal regulators said.
The Federal Energy Regulatory Commission wants New York’s transmission grid to be included with the one that serves New Jersey, Maryland, Pennsylvania, and Washington, D.C., to lower the cost of trading power with other systems, Commission Chairman Pat Wood said. The commission would have to approve a merger of the New York and New England grids.
“The fact that they are talking about economizing and bringing the northern region together in a single market is definitely a plus,” Wood said outside a commission meeting held in New York to discuss the energy needs of U.S. Northeast. “I just want to see if it’s the best plus we can get.”
The commission has been promoting regional transmission organizations, or RTOs, that would make it easier and less expensive for generators to send power across long distances. PJM Interconnection LLC, the mid-Atlantic grid operator, wants to join up with a Midwest-based group to form a 27-state network stretching from New Mexico to New Jersey.
Inefficient transmission systems in the U.S. added $1.04 billion to power bills during the past two summers, according to the commission. FERC wants to disband the network of 160 utility-run systems and replace it with a handful of systems run by regional operators.
“Freer Flow of Energy”
The proposed merger of New York Independent System Operator and ISO New England would cover New York, Connecticut, Massachusetts, Rhode Island, Maine, New Hampshire and Vermont, serving 33 million customers. The combination would eliminate “barriers to the freer flow of energy,” the groups said in a joint statement earlier this week.
The groups hope for Federal Energy Regulatory Commission approval later this year, the statement said.
The difficulty of transmitting power from the New York grid to the mid-Atlantic grid creates a “huge” cost that is ultimately passed on to consumers, FERC Commissioner Nora Mead Brownell said.
The New York-New England merger is “interesting, but it bears closer examination.” she said. The merger may not “address the seams issue between New York and PJM.”
Starting Point?
Regulators and utility officials in New York said the merger may serve as a starting point in building a bigger group that would include PJM’s grid.
“We think it’s a good step, but we hope that they’ll continue to work with the PJM to open up markets in that direction,” said Maureen Helmer, chairwoman of the New York State Public Service Commission.
“A larger area would be better,” said Eugene McGrath, chief executive officer of Consolidated Edison Inc., the owner of New York City’s electric utility. “This may be the beginning of more and more regions coming together. I’m not opposed to anything where the areas get bigger and the rules across the areas are improved.”
New York ISO and ISO New England were negotiating with PJM last fall about a three-way merger, said Steven Sullivan, a spokesman for the New York group in Schenectady, New York.
“At the end of the day they could not come to a common agreement of how the Northeast RTO should be formed,” Sullivan said. “We’ve done a preliminary analysis that shows we’re going to get just as much savings out of a New England-New York merger as we would if it was a three-way merger with PJM.”
New York ISO officials are still meeting monthly with PJM officials to eliminate differences in the way power deliveries are scheduled and handled, he said. Such differences have forced generators to cancel some trades across the border.
Bloomberg News
