Regulators study new pricing system

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WASHINGTON (AP) – Federal regulators are considering a new electricity pricing system for New England aimed at promoting the development of new power plants in the region to meet increasing energy demands.

Supporters of the settlement have asked for a decision by June 30 from the Federal Energy Regulatory Commission. Agency spokeswoman Barbara Connors said Wednesday the commission would act “expeditiously” on the proposal, but she offered no timeline on a decision.

The new plan replaces a federal proposal that sparked regionwide controversy last year because it allowed power companies to charge more in high-demand areas where supplies are tight.

Supporters of the current proposal said it would encourage new power plant construction which the region sorely needs. The plan would create auctions where power plants would bid against each other to provide power.

“This agreement is a critical step forward in the development of a reliable, efficient power system for the region,” Gordon van Welie, ISO New England president and chief executive officer, said in a statement. “It addresses one of the most significant challenges we face: ensuring there are enough resources to meet New England’s growing demand for electricity.”

The Connecticut and Massachusetts attorneys general oppose the plan.

Massachusetts Attorney General Tom Reilly warned the propsal will force New England ratepayers to shell out an additional $5 billion through 2010 in so-called “transition payments” with no guarantees that new plants will be built.

“This settlement means nothing more than windfall profits for generators,” Reilly said in a statement Wednesday. The plan will force New England and Massachusetts ratepayers to pay $5 billion in subsidies to power generators with no expectation that they will see even one new power plant.”

Connecticut Attorney General Richard Blumenthal has complained the plan provides windfall profits and subsidy payments to power providers.

A judge on Tuesday submitted his 10-page report on the proposed plan to FERC.

Settlement Judge Lawrence Brenner oversaw the agreement that was crafted after several months of negotiations among more than 100 interested parties, including state officials, utilities, regulators, various energy industry officials and consumer representatives.

ISO New England is the power grid operator for the region. Under the plan, ISO would predict the region’s power needs for three years in advance and then hold auctions.

Residential customers would pay an extra $4.50 on an average $100 monthly bill, according to one estimate.

The public utility regulatory agencies from five of the six New England states – Connecticut, Rhode Island, New Hampshire, Vermont and Massachusetts – were “supporting parties” of the settlement, according to Brenner’s report.

Maine utility regulators in February withdrew from settlement talks for the electric rate plan for New England, saying they could not accept increases that would give energy companies an unjustified windfall.

The Massachusetts Department of Telecommunications and Energy, the state’s public utility regulator, earlier this year had said it would oppose the plan.

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