Energy Commission Will Consider Alternatives to LICAP
By Mandy Kozar
WASHINGTON, Oct. 26-New England energy officials have been given an opportunity to offer alternatives or amendments to the controversial proposal that would allow energy suppliers to increase rates in areas of high demand and low supply. Critics say the plan would cost Connecticut residents more than $500 million in the first year without a guarantee of improved service.
The Federal Energy Regulatory Commission appointed an administrative law judge last Friday who will oversee efforts to reach a settlement on the proposed system, known as LICAP, which stands for Locational Installed Capacity. The money gained from the rate hikes, according to the plan, would be used to build new plants that would increase production and reliability.
With its increasing demand for energy, southwest Connecticut is one of the most critical areas in terms of power supply. However, according to state energy officials, until new transmission lines are put in place, there would be no reason for new plants to be built.
“This order gives the region an opportunity to develop a workable alternative to LICAP,” energy commission chairman Joseph T. Kelliher said in a news release. “I urge the parties to dedicate themselves to that end and reach a settlement.”
Since it was introduced in 2004 by the not-for-profit Independent Service Operator (ISO) for New England, the system has been criticized by energy officials and politicians as too expensive and providing no guarantee of improvement or reliability in energy service.
The forum for settlement talks is, according to the commission, an opportunity for alternatives to be presented and discussed to find the best plan to establish a reliable and efficient power supply in New England.
“The commission’s role is to decide whether the proposal is just and reasonable and not unduly preferential and discriminatory,” said Bryan Lee, spokesman for the federal agency.
According to the federal order, Lawrence Brenner, the settlement judge, will hold the first conference Nov. 8 to discuss alternatives.
Groups on both sides of the argument said they welcome the settlement talks to facilitate development of the best plan for New England.
“We believe that settlement is the best means of resolving and implementing an effective capacity market in New England,” Ken McDonnell, spokesman for ISO New England, said.
Democratic Senator Joseph Lieberman is among the Connecticut lawmakers who oppose the rate plan. He said in a news release that he supports the settlement talks as a way to find an alternative to ISO New England’s proposal and is happy the commission has appointed a judge to move the proceedings along.
“The current LICAP proposal by FERC results in totally unacceptable high rates of electricity to Connecticut consumers and businesses,” Lieberman said. “It is my sincere hope that the settlement process may lead to consideration of all the various alternatives to LICAP and a better outcome for Connecticut.”
During oral arguments on Sept. 20, roughly five alternative plans were proposed by opponents, who argued that ISO New England’s plan was not practical for all areas of New England.
According to ISO New England, however, all regions were considered in their proposed system, which the service operator developed over a period of two to three years.
“LICAP was developed with the interests of every area of New England in mind.” McDonnell said. “So yes, we believe that for all segments including southwest Connecticut, that LICAP is the best solution that’s been offered so far, but at this point we welcome the settlement talks.”
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