GOV. CHARLIE BAKER and four other New England governors made a push on Friday for a much bigger say in the way the region’s electricity markets are regulated and governed, although the vision statement they issued steered clear of the top recommendation put forth by the region’s power grid operator – a carbon tax.
The governors of Massachusetts, Connecticut, Rhode Island, Maine, and Vermont are concerned that the long-term electricity contracts their states are negotiating with offshore wind operators and the province of Quebec are not being absorbed into the existing wholesale markets for electricity. As a result, the vision statement says, the direct purchases of electricity by states and the production of electricity through wholesale markets are working at cross-purposes and may result in ratepayers paying for the production of power they don’t need.
The vision statement reflects a growing recognition that much larger amounts of electricity will need to be produced to decarbonize the transportation and other sectors of the economy. The vision statement calls for a reimagining of the region’s wholesale electricity markets; the development of a grid that relies less on big power plants and more on local wind, solar, and battery projects; and a new governance structure for the regional grid operator.
One area the mission statement does not explore is the recommendation by the grid operator, ISO New England, that the best way to make wholesale electricity markets work effectively is to impose a carbon tax that would nudge the market in the direction of cleaner forms of energy.
The statement suggests the grid operator, ISO New England, needs to rein in spending on new transmission facilities while it figures out a new course ahead. The statement said transmission charges in New England rose from $869 million in 2008 to $2.4 billion in 2019, or about 20 percent of the total cost of operating the grid.
“Just as the time is right for a holistic relook at markets and transmission planning, so too is it time to ensure ISO New England’s mission and governance keep pace with changes in law and a transitioning energy system,” the mission statement said. “The states are concerned that consumers will ultimately incur increased costs absent a reexamination of the governance structure and ISO New England’s mission in light of the aforementioned changes.”
The governors say the regional grid operator does not incorporate enough input from states and consumers and meetings are too often closed off from the public. They also point out that cost consciousness is not mentioned in ISO New England’s mission statement, nor is the growing purchases of clean energy by states.
According to the vision statement, members of the governing board of ISO New England are selected by votes of the seven current board members, six market participants and stakeholders, and one shared vote for all of the New England states.
“This one-vote-for-six-state-governments may have been comfortable in the late 1990s when regional planning and markets had relatively marginal interaction with the requirement of state laws,” the statement said. “Today it merits a relook.”
ISO New England issued a very short statement. “We have reviewed the NESCOE [New England States Committee on Electricity] vision statement and look forward to speaking with the states on these issues, it said.
