Did You Know

ISO New England Documents Lower Prices, Greater Investment and Improved Efficiency, Reliability and Environmental Performance

There has been a great deal of media coverage in recent months on the efficacy of regional transmission organizations (RTOs) and the benefits of electric power markets. This month, a definitive set of facts was issued by ISO New England (ISO-NE) in a new report, “Progress of New England’s Restructured Electric Industry and Competitive Markets: The Benefits of ISOs and RTOs.” ISO-NE documented a number of positive occurrences resulting from the long-term performance of its electricity market.

The key finding is that since the first full year of operation, beginning in 1999, New England wholesale electricity prices, after accounting for fuel price changes over that time, have declined by 5.7 percent. Further, the fuel-adjusted price decline in the region from 2001-2004 was even more dramatic – 11 percent.

In addition, the report noted that more than $9 billion was invested in new power plants from 2000-2004, while an investment in transmission of up to $4 billion has been realized. Further, the region’s competitive markets have created incentives to improve the overall performance of existing generation and transmission facilities – particularly from the standpoint of operations and maintenance, facility utilization and efficiency.

The investment in new, efficient generation has resulted in reduced reliance on older, less efficient and more polluting power plants. Sulfur dioxide and nitrogen oxides emissions, respectively, have been reduced by an estimated 48 percent and 32 percent, while carbon dioxide emissions declined by an estimated 6 percent – despite the increase in demand and electricity production over that time frame.

The additional generation, along with the competitive market incentives to improve generator availability, enhance operation and make infrastructure investment more efficient, has led to a fuel-adjusted reduction in wholesale market costs of approximately $700 million annually. “Progress such as this is evidence that markets are working to meet their objective of delivering significant value to consumers,” according to ISO-NE.

ISO-NE oversees a system with approximately 350 generating units, 8,000 miles of high-voltage transmission lines and 12 interconnections to neighboring systems – all serving 6.5 million New England businesses and households. As the RTO for the region, ISO-NE is the single point of control for maintaining reliability, and this enhanced authority has increased its ability to protect the region from system disturbances and disruptions.

A copy of the report can be found on ISO-NE’s web site, www.iso-ne.com on the “What’s New” link.