ISO New England Inc. last Thursday said that its new standard market design (SMD) for the region will become operational on March 1, 2003. The move follows failed pleas by Connecticut’s attorney general that the grid operator delay implementation of the SMD proposal out of concern that it will spike electric rates in the state.

The decision by ISO New England to go live with SMD on March 1 follows a 22-month development effort. In addition to developing the Internet-based computer technology, other SMD planning efforts included software testing and certification from an independent software auditor, two internal market trials, and three external market trials where market participants practiced using the new software under simulated market conditions.

Training for the more than 180 New England Power Pool (NEPOOL) representative companies was held over the course of 18 months and included more than 50 SMD training classes attended by 2,500 trainees. Also, ISO New England held regular Web-assisted teleconferences to provide the latest SMD information and to allow market participants to discuss and resolve issues and concerns.

Close coordination between ISO New England and market participants was a significant element in the decision to move ahead with SMD on March 1, according to Gordon van Welie, president of ISO New England. “We have worked closely with the participants to address their concerns and provide the necessary training and resources. And while some market participants indicated a preference to defer implementation until April 1, the benefits of going operational in March outweigh the risks of delaying another month.”

“The implementation of SMD at this time and in its present form will have profoundly negative impacts on Connecticut’s electric consumers and will not have the effects desired or publicly described by the FERC or ISO-NE,” Connecticut Attorney General Richard Blumenthal said in a recent letter to FERC Chairman Pat Wood and ISO-NE Van Welie.

“It is critical that you delay the implementation of SMD to ensure that electric markets in Connecticut and New England develop fairly, that consumers are not unjustly penalized and that the development of a retail electric market in Connecticut is not stifled,” Blumenthal said.

But ISO New England said that a delay would reduce the time frame for ISO New England to address any operational problems in the new software prior to the peak summer demand season, when power system conditions are typically the most stressed. Electricity demand in New England hit record levels the past two summers.

In addition, ISO New England’s announcement “provides the certainty many market participants need to finish the commercial arrangements required for the start of the new market.”

Blumenthal and Massachusetts Attorney General Thomas Reilly immediately blasted the ISO’s decision and didn’t rule out the possibility of taking legal action in response.

“This move is an ill-considered disservice to consumers because it means higher rates with no benefits,” said Blumenthal. “It makes a mockery of responsible and responsive market planning and oversight, which is ISO-New England’s reason for existing.”

Blumenthal said that his office “will consider immediate options to act against this new market system, including relief from federal agencies and the courts if necessary.”

“This is fraught with peril for ratepayers, and it’s devastating news to ratepayers in the Boston area,” Reilly told the Boston Globe. “But [the] ISO’s never really shown any concern about the impact on ratepayers.”

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