KENNEDY, MARKEY URGE ENERGY REGULATORS TO EXAMINE NEW ENGLAND CAPACITY SHORTFALL
Massachusetts – Citing dramatic increases in energy costs to ratepayers across Massachusetts, Congressman Joe Kennedy III and Senator Edward J. Markey today led members of the New England Congressional Delegation in asking federal regulators to reevaluate the method for setting energy prices throughout the region.
Currently prices are set via a “forward capacity market” where energy suppliers establish baseline prices with ISO New England several years in advance, based on projected grid capacity and regional demand. The lawmakers raised concerns that the current process has driven up prices for consumers while failing to spur much-needed grid upgrades and improvements.
“Forward capacity markets have failed to update or advance our energy grid and it’s consumers who pay the price,” said Congressman Kennedy. “As families across New England face record-high energy bills this winter, the auction process risks compounding this pain for years to come. In particular, the shortfall results of the 2014 auction due to plant closures including Brayton Point require additional federal attention. We urge regulators to swiftly reevaluate the 2014 results and comprehensively reexamine the effectiveness of New England’s capacity market as a whole.”
“Consumers shouldn’t pay higher prices because of a dysfunctional energy market, and we need to fix this broken system immediately,” said Senator Markey. “Consumers are already paying too much for energy in our region. Consumers need to have confidence that these energy auctions are fair, competitive, and ensure New England has adequate power plant capacity in the future. This $3 billion charge from the most recent auction may not deliver on that promise. That’s why we need our energy regulators to revisit this recent auction and help fix this market so New England ratepayers are protected.”
The letter specifically asks the Federal Energy Regulatory Commission (FERC) to rehear and reevaluate the results of this year’s regional auction (“FCA8”), which was the first time an auction resulted in future capacity shortfall. The shortfall was caused largely by the retirements of several suppliers, including Brayton Point Power Station in Somerset, Mass. Congressman Kennedy and other local stakeholders had previously asked FERC to investigate these auction results and determine whether potential market misconduct was involved. Shortly thereafter, FERC found the results of New England’s 2014 auction “deficient” and requested additional information. After additional information was supplied by ISO-NE, FERC failed to take conclusive action and in September, the results became automatically certified.
“After ISO-NE provided further information FERC was unable to make a conclusive determination on the filing, even though the additional information alluded to potential market misconduct. Unfortunately, the lack of action by FERC allowed the results of FCA8 to become effective,” the lawmakers wrote. “For the sake of good governance, adequate transparency, implications on New England ratepayers, and clarity in the energy industry, we believe FERC must conclusively rule on the results of FCA8 and strongly encourage FERC to hold a rehearing as soon as practical with five sitting FERC Commissioners.”
The letter continues: “According to the U.S. Energy Information Administration, in 2013, New England consumers and businesses paid the highest average retail electricity prices in the continental U.S. at 14.48 cents/kWh. Utility companies in New England are already planning substantial additional rate increases heading into the 2014-2015 winter. The results of FCA8 will further compound the pain for New England ratepayers three years from now. With the FCA8 auction price clearing $3.05 billion, the starting price for operating year 2017-2018 is well above the previous high of $1.77 billion in 2009.”
In addition to Kennedy and Markey, the letter was signed by Senator Elizabeth Warren (MA), Senator Jack Reed (RI), Senator Sheldon Whitehouse (RI), Rep. Niki Tsongas (MA), Rep. Bill Keating (MA), Rep. Richard Neal (MA), Rep. Mike Capuano (MA), Rep. John Tierney (MA), Rep. Katherine Clark (MA), Rep. Jim McGovern (MA), Rep. Stephen Lynch (MA), Rep. Jim Langevin (RI), Rep. David Cicilline (RI), and Rep Peter Welch (VT). For a copy of the full letter, please click here.
For a copy of Congressman Kennedy’s previous letter regarding the results of FCA8 and the closure of Brayton Point, please click here.
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For Immediate Release:
October 16, 2014
Contact:
Emily Kaufman (Kennedy) – 617-332-3333
Eben Burnham-Snyder (Markey) – 202-224-2742
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