FERC investigating New England’s excessive electricity rates

Washington — One of the constant refrains of pipeline advocates is that New England electricity rates are higher than in the rest of the country and that “abundant supplies of low-cost natural gas” will bring the rates down. (See accompanying article on the demise of Kinder Morgan’s Northeast Direct natural gas pipeline.) Not only is this assumption highly questionable because of the complex and unpredictable factors that influence electricity prices, but, also, to the extent that the transmission part of New Englanders’ energy bills is high, that may soon be changing.

In December, the Federal Energy Regulatory Commission found that “ISO-NE’s Transmission, Markets, and Services Tariff is “unjust, unreasonable, and unduly discriminatory or preferential.” The Commissioners found that it wasn’t possible to determine how certain costs were arrived at because the rate formulas lacked sufficient detail.

Dan Dolan, president of the New England Power Generators Association, told the Manchester Union Leader news service in New Hampshire that “Now we are seeing upwards of 60 percent of a bill being made up of transmission and distribution costs. It’s been a complete flip from the historical norm, with a massive build-out that the utilities have undertaken.”

When a settlement is reached, New England ratepayers are expected to get rebates for the unfair transmission rates paid. A significant component of electric bills – the transmission cost – should be trimmed down in the future.