ISO New England ask FERC to clarify order

By the OGJ Online Staff

HOUSTON, Aug. 20 -- The New England grid operator asked federal regulators for permission to continue development but not implement systems borrowed from PJM Interconnection, while negotiations are under way to form a single Northeast regional transmission organization.

ISO New England Inc. is on track to begin trials in the fourth quarter of 2002. Stopping development would delay addressing the urgently needed improvements to the New England wholesale market, the grid operator said, and could delay the creation of the single northeastern wholesale power market sought by the Federal Energy Regulator Commission.

Without PJM market rules and systems, ISO New England said high levels of transmission congestion and energy uplift, which cannot be hedged, will continue in the region. Participants will not be able to self supply to hedge against potential high reserve market prices.

New England's single settlement market will remain vulnerable to internal and external resources that schedule day-ahead but who do not perform in the operational day. Without a day-ahead market, the ISO said more generation will continue to be brought on line day-ahead to compensate for lack of financially binding commitments in real time.

ISO New England is proposing to adopt software from PJM Interconnection, the mid-Atlantic grid operator. The New England grid operator claimed much of the work product and systems should "be reusable," even if the outcome of the single Northeast market design effort isn't known.

The ISO asked for clarification of FERC's July 25 order stating it would "not now approve" the standard market design during negotiations among ISO New England and its northeastern counterparts -- PJM Interconnection and the New York Independent System Operator -- to create an RTO that would form a single market for power.

The negotiations had previously been ordered by FERC to encourage a single Northeast power market in the future. ISO New England CEO Gordon van Welie said the standard market design is an important first step in meeting FERC's goal.

The grid operator asked FERC to clarify its statement that it would not approve implementation of the standard market design during these negotiations -- not that it prohibited continued development of the proposed system. Some market participants have argued the orders bars the ISO from continuing to develop systems necessary to implement PJM market system and rules in New England.

ISO New England said it will make necessary adjustments in its planning effort to ensure they are cost-effective and reflect decisions made in the negotiations to form a single RTO in the Northeast.