Energy East Pushes for Merged Northeast ISOs

Energy East Corp., which continues to favor consolidating the New York, New England and Pennsylvania-New Jersey-Maryland independent system operators (ISOs), recently offered a blueprint of ways to improve an ongoing process under which the Northeast ISOs are looking to enhance regional reliability.

In March, the company's New York State Electric & Gas (NYSEG) subsidiary issued a six-point energy policy statement that advocated the creation of a regional transmission organization. "Energy East has the perspective of operating electric utilities in both the New York and New England regions, and it has become crystal clear that a regional energy market with more suppliers and more consumers will improve market liquidity and enhance wholesale competition," said Denis Wickham, Energy East's senior vice president for transmission and supply.

NYSEG recently issued a proposal to enhance an ongoing memorandum of understanding (MOU) process under which the ISOs are exploring options to improve regional reliability through coordinated operations and planning, facilitating broader competitive markets and improving communications with market participants and the public. "By implementing the changes in the MOU process that NYSEG suggests, we can move more decisively toward common markets, implementing best practices and avoiding new problems that could result from rules or software changes within one ISO or another," Wickham said.

Among other things, NYSEG's suggested MOU process changes include the creation of a chief executive officer committee, representing all three ISOs, to monitor progress and expedite the approval and implementation of changes. In addition, the utility proposed enabling all three ISO boards of directors to participate in the MOU process through periodic meetings with an inter-ISO coordinating team and committing each ISO committee to vote on changes approved by the MOU working group within 45 days. NYSEG also floated the idea of creating a vehicle to have all three ISOs resolve issues and approve action in unison.

Energy East and NYSEG were critical of certain elements related to the MOU process. In particular, the companies said that the working groups involved in the ongoing MOU discussions operate independently and do not have a mechanism to formally implement market participant recommendations. Also, coordination of activities has been cumbersome and participation in the discussions by market participants has been declining. "We need to fix this process now in order to ensure optimal results," Wickham said. "The end result of these MOU discussions can and should be a more competitive wholesale power market which will benefit retail competition and, ultimately, end users."

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