http://www.boston.com/news/local/massachusetts/articles/2003/08/19/after_blackout_new_england_ponders_energy_upgrade

After blackout, New England ponders energy upgrade

By STEPHEN SINGER, Associated Press Writer, 8/19/2003

HARTFORD, Conn. -- Before last week's blackout darkened parts of the Northeast and Midwest, energy producers, distributors and large consumers in New England agreed to share the $900 million price tag for several immediate improvements to the aging system.

But Maine and Rhode Island are balking at a plan that would split the costs for improvements in Connecticut, Massachusetts and Vermont among customers in all six New England states.

The majority of the bill -- $700 million -- is associated with boosting transmission capacity in southwestern Connecticut, the area of New England hardest-hit by last week's power outage.

Late last month ISO-New England, which operates the region's power grid, asked the Federal Energy Regulatory Commission to approve the cost-sharing proposal.

"A weak power grid is going to hurt all of us," Stephen G. Whitley, chief operating officer of ISO-New England, said Tuesday. "Projects don't come up at the same time. You'll need projects in Maine and Rhode Island. It's just a matter of timing when your number is up."

Maine Public Utilities Chairman Tom Welch said the cost-sharing -- called "socialization" -- forces rural areas to bear the same costs as the fast-growing urban areas that benefit the most.

Welch said he's not opposed to some cost-sharing. But he said the formula should be altered.

"What we're saying is that if you can identify the primary beneficiary of the project, those people should pay the predominant share," he said.

Much of the region's immediate energy transmission problem is in densely urban southwest Connecticut. The aging system serves Connecticut's New York City suburbs and a large number of businesses ranging from General Electric Co.. and Xerox Corp. to priceline.com.

Northeast Utilities, the parent company of Connecticut Light & Power, has proposed two transmission line projects for the area.

The Burlington, Vt., area also has been identified for a $125 million upgrade, and another $75 million in improvements are slated for the Boston area, Whitley said.

After five workshops organized by ISO-New England, industry stakeholders overwhelmingly voted for regional financing, Whitley said. The stakeholders are 120 representatives of transmission, distribution, marketing and generating companies, public power entities and large electricity customers such as paper mills.

Opposition came primarily from representatives in Maine and Rhode Island, which benefit from surplus power capacity, Whitley said.

Welch, the Maine utilities regulator, said socialization sends the wrong message on pricing and discourages discipline.

Elia Germani, chairman of the Rhode Island Public Utilities Commission, said a cost-sharing plan penalizes Rhode Island for keeping its systems updated..

Rhode Island is asking FERC to order beneficiaries to pay 50 percent of improvement costs. Under Rhode Island's plan the remaining expenses could be spread among the New England states.

Ron LeComte, director of the electric power division at the Massachusetts Department of Telecommunications and Energy, told The Boston Globe that his state favors socialization.

Massachusetts utility companies are likely to propose similar projects for the Boston area and will need Connecticut's support for cost-sharing, LeComte said.

Anne Ross, assistant consumer advocate for the New Hampshire Public Utilities Commission, said that state doesn't have a position on the issue yet.

"As a policy matter we probably think there might be a better balance between us and a simple straightforward socialization," she said. "Obviously we cannot ignore a region, because power distribution is regional and national. But our priority is New Hampshire consumers."
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