Sithe blames high Boston area power prices on transmission constraints

Sithe Energies Inc. said yesterday higher consumer electric prices in the Boston area result from transmission constraints that are the responsibility of the local utility, NSTAR, to fix. NSTAR filed last week with Federal Energy Regulatory Commission, alleging generating companies Sithe and PG&E charged excessive rates for electricity. NSTAR requested FERC order refunds and revoke the generators' authority to charge market-based rates when electricity is not available from other sources.


By the OGJ Online Staff

HOUSTON, May 22 -- Sithe Energies Inc. said Monday higher consumer electricity prices in the Boston area result from transmission constraints that are the responsibility of the local utility, NSTAR, to fix.

NSTAR, a Boston-based transmission and distribution utility, filed last week with Federal Energy Regulatory Commission, alleging Sithe and PG&E charged excessive rates for electricity. NSTAR requested FERC order refunds and revoke the generators' authority to charge market-based rates when electricity is not available from other sources.

NSTAR said northeastern Massachusetts was a transmission-constrained area.

Sithe Vice-chairman Barry Sullivan responded to the complaint that allegations about Sithe in the filing were "baseless and at worst disingenuous and misleading."

New England is a restructured marketplace where the utilities sold generation assets to outside companies and utilities still own the transmission and distribution systems. Providing generation is now the responsibility of Sithe and PG&E. But the problem of transmission constraints is an issue for which NSTAR a transmission company has direct responsibility, said Sithe.

"NSTAR's efforts have failed to add transmission capacity sufficient to alleviate the constraints of which NSTAR complains," said Sithe in a release.

NSTAR said in its filing to FERC that problems arise when transmission lines are fully loaded and customers are forced to buy more expensive power from local plants.

"With two local companies controlling almost 90% of that supply, they have the ability to corner the market and dictate excessive prices that we and our customers believe are unjust and unreasonable," said Paul Vaitkus, NSTAR's vice president of energy supply.

Last year, wholesale electricity prices soared to about $6,000/Mw-hr and NSTAR obtained a temporary price cap of $1,000/Mw-hr to stop price gouging, Vaitkus said. The cap was supposed to expire in October 2000 but remains in place.

In fact, NSTAR said it was forced to file with the Massachusetts Department of Telecommunications and Energy on May 18 for increase to rates for default service to electricity customers that don't choose alternative suppliers. The utility also requested an increase in the fuel charge for the standard offer service.

NSTAR in its FERC filing said the rates it is charged for generation during times when outside cheaper power is not available are called "transmission congestion charges." These charges amounted to $70 million last year in northeastern Massachusetts alone.

NSTAR called on FERC to limit the two generators to "out of pocket" expenses during periods of congestion.

Sithe said that the ISO New England has rules approved by all market participants, including NSTAR, in place to protect consumers by identifying market bids that should be lower to avoid higher wholesale prices when there is inappropriate influence of market power.

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