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Northeast could see shocking rise in electric rates

WASHINGTON — Electricity rates threaten to follow the path of gas prices: Up. ISO New England, the region's grid operator, is gaining support for a plan to raise electricity rates by $5 billion over four years, beginning in December. Rates would continue to rise at an undetermined click after that.

If the plan is approved by the Federal Energy Regulatory Commission, a step likely to occur this summer, residents would pay about 12 percent more to light, cool and otherwise electrify their homes.

The proposal comes as the demand for electricity in the Northeast is increasing, straining the insufficient number of generation plants and threatening rolling blackouts throughout the region during periods of peak use.

The rate hike would be used to encourage construction of new plants — specifically in northeast Massachusetts and southwest Connecticut — to buttress a limping grid that federal energy officials describe as one of the weakest points in the nation's electric network.

"The status quo is not an option," said Gordon van Welie, president and CEO of ISO New England. "As early as 2008, the region may not have enough power supply to meet its electricity needs."

The plan would end three years of negotiations between federal regulators, utilities and energy companies on how to enhance the region's electric grid. Supporters have asked FERC to approve the proposal before June 30.

Opponents include Massachusetts Attorney General Tom Reilly, who's fighting the increase and says the plan would enrich energy companies... more [truncated due to possible copyright]  

If the plan is approved by the Federal Energy Regulatory Commission, a step likely to occur this summer, residents would pay about 12 percent more to light, cool and otherwise electrify their homes.
 
The proposal comes as the demand for electricity in the Northeast is increasing, straining the insufficient number of generation plants and threatening rolling blackouts throughout the region during periods of peak use.
 
The rate hike would be used to encourage construction of new plants — specifically in northeast Massachusetts and southwest Connecticut — to buttress a limping grid that federal energy officials describe as one of the weakest points in the nation's electric network.
 
"The status quo is not an option," said Gordon van Welie, president and CEO of ISO New England. "As early as 2008, the region may not have enough power supply to meet its electricity needs."
 
The plan would end three years of negotiations between federal regulators, utilities and energy companies on how to enhance the region's electric grid. Supporters have asked FERC to approve the proposal before June 30.
 
Opponents include Massachusetts Attorney General Tom Reilly, who's fighting the increase and says the plan would enrich energy companies on the shoulders of residents and businesses.
 
Congress helped stymie a more robust plan last year — ISO New England sought a $14 billion rate increase — by including language opposing the proposal in a national energy bill.
 
Sen. Edward Kennedy, D-Mass., told the Transcript on Tuesday that he has "serious reservations" about increased rates in Massachusetts, which he said are already "virtually out of sight."
 
He met with van Welie last month and said he's reviewing the plan.
 
Sen. John Kerry, D-Mass., is also reviewing the proposal. But Kerry said in an interview that energy companies should provide the investments for new generation plants, not ratepayers.
 
"We can have an increase in generation and cut down rates with the proper investments," he said. "There isn't a family in Massachusetts that isn't hurting from the increase in energy costs."
 
Private investments could be accelerated through government incentives, such as grants and tax credits, Kerry said. He added that electricity should come from other sources than coal and natural gas plants.
 
Solar, wind, and bio fuel sources should used to ease the pressure on traditional electricity plants, Kerry said.
 
A number of wind-power projects have been proposed in Western Massachusetts and Southern Vermont but none have yet made it off the drawing board.
 
Congressman John Olver, D-Amherst, said: "I believe that ratepayers in Massachusetts and New England should not be forced to pay huge rate increases that translate into subsidies for power generators to build new power plants — while little to nothing is being done in regard to energy conservation efforts."
 
July decision
 
Opponents will be able to lobby FERC before it makes a decision, probably by July.
 
The plan has gained support from a majority of New England players.
 
Among them are the New England Power Generators Association and Massachusetts Department of Telecommunications and Energy.
 
A settlement judge handling the case said support for the plan is "extraordinary" when compared to the "warring positions" evident during the broader proposal last year.
 
The plan seeks to establish lower energy prices by holding an auction among generators, who would then provide the most affordable electricity.
 
If support for the plan fractures, the decision on how to correct New England's power supply would fall to FERC.
 
The commission, as one option, could implement the proposal favored by a FERC judge last year seeking to raise regional electric rates by $14 billion — a threefold increase over the current plan.
 
"Although the commission will encourage consensus, we will not ignore a problem and simply hope it goes away," FERC Chairman Joseph Kelliher said two weeks ago. "The lack of investment (in supplying electricity) is a real problem that must be addressed."
 
Kelliher warned that New England could experience rolling blackouts — controlled widespread power outages during periods of low supply — and compared the region to California, which suffered crippling blackouts and rate hikes in 2001.
 


Source: http://www.thetranscript.co...

MAY 5 2006
https://www.windaction.org/posts/2467-northeast-could-see-shocking-rise-in-electric-rates
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