New England electric rates to be investigated
he cost of moving electricity from one place to another, which appears on your electric bill as transmission, is much higher in New England than in other parts of the country, and the Federal Energy Regulatory Commission wants to know why.
In an order issued on Dec. 28, FERC commissioners wrote that New England transmission rates appear to be “unjust, unreasonable and unduly discriminatory or preferential” and called for an investigation.
The commissioners wrote in their order that the owners of transmission towers in New England appear to set rates with no meaningful justification and no real opportunity for them to be challenged. “The rates appear to lack sufficient detail in order to determine how certain costs are derived and recovered,” according to the commission order.
“Rate protocols should afford adequate transparency to affected customers, state regulators or other interested parties, as well as provide mechanisms for resolving potential disputes,” the order states, adding that, “integrity and transparency … are critically important to ensuring just and reasonable rates.”
The commission has set in motion a process that could lead to a settlement with the transmission owners and ISO-New England, the grid operator; or it could lead to hearings, legal arguments and an eventual order dealing with the transmission costs and how they are set.
New Hampshire electric consumers could be seeing much more economic benefit from the free-fall of oil and natural gas prices, if not for the offsetting effect of transmission and distribution costs. Transmission moves electricity from the sources to the wholesalers on the big metal poles and towers, while distribution gets it to your door on the wooden poles that line the street.
“It used to be a few years ago, about 50 or 60 percent of the electric bill would be made up of the cost of the energy,” said Dan Dolan, president of the New England Power Generators Association. “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 norms, with a massive build-out that the utilities have undertaken.”
The same does not hold true in other parts of the country, where transmission and distribution make up much smaller portions of the bill (see chart), even though the grid operators in the other regions serve a much broader territory.
“This activity is driven in large part by FERC’s interest in implementing a consistent approach to rate transparency across the country,” said Martin Murray, a spokesman for Eversource, which along with National Grid owns 80 percent of the transmission load in New England.
Twice as expensive
The PJM Interconnection, which serves 13 states and the District of Columbia in a swath of territory extending from New Jersey to Illinois, has the second-highest transmission costs in the country after New England.
Transmission costs in the PJM market are about 50 percent of what is charged in New England. While Eversource customers in New Hampshire pay 2 cents per kilowatt hour for transmission, Commonwealth Edison (the Pennsylvania utility in the PJM market) charges 1.1 cents. – See more at: https://www.unionleader.com/article/20160110/NEWS05/160119977&source=RSS#sthash.1qP8lMNJ.dpuf
