ISO New England oversees a power system to meet the region's current and future electricity needs

ISO New England has improved the operation of the region's power systems and encouraged investment in critically needed resources, such as new power plants, transmission projects, demand response and conservation, and information technology.

This progress has resulted in a more reliable, economical and environmentally friendly power system.

• New England wholesale electricity prices, after adjustment for fuel costs, have declined by 5.7% since 2000.
• More than $6 billion in private investment between 2000 and 2004 has added more than 9,000 megawatts (MW) of new, modern power plant capacity, a 30% increase in supply.
• The risk of these investments is borne by investor shareholders, not by consumers.
• These investments significantly improved reliability and competition, and between 2000 and 2004 reduced annual carbon dioxide emissions by 6%, nitrogen oxide emissions by 32%, and sulfur oxide emissions by 48%.
• Power plant operators have responded to competitive markets by improving the maintenance of generating resources, resulting in higher rates of unit availability, lower prices and reduced emissions.
• Through the ISO's regional planning process, five major bulk transmission projects (345kV) have been sited, addressing transmission bottlenecks that existed for up to 20 years during the pre-market era. Progress is being made on a sixth major transmission project.
• ISO-New England's Demand Response Programs, which provide incentives for customers to reduce their electricity use during periods of high demand or high prices, resulted in more than 13,000 megawatt-hours of decreased electricity use in 2004. Participation in these programs has grown six-fold in the past three years; today, more than 600 MW are enrolled in the various programs.

ISO New England has worked closely with state officials and market participants to transition the industry from one that is heavily regulated to New England's restructured model based on competitive markets.

ISO New England is well positioned to create even greater benefits for consumers as the system evolves by maintaining a reliable and efficient electricity system, achieving greater efficiencies to reduce costs, and responding to future market and technology challenges.

ISO New England is delivering value to the region

In addition to running the wholesale electricity markets, optimizing use of regional high-voltage transmission lines, and ensuring that New England complies with national electric reliability standards, ISO New England provides a vast array of other services, including:

• Administration of an innovative, highly effective regional planning process to identify system needs and jump-start investment.
• Active involvement in state siting processes that have led to approvals of five critical transmission projects in four states.
• Improved coordination with the natural gas industry to avoid winter blackouts when the demand for gas to heat homes peaks and competes with the needs of gas-fired power plants.
• Management of best-in-class demand response programs and region-wide focus on system needs and regulatory coordination.
• Procurement of emergency sources of power for:
  • Southwest Connecticut to protect against summer blackouts.
  • Winter operations in light of natural gas shortages caused by Hurricanes Katrina and Rita.

Each of the ISO's responsibilities plays a significant role in enhancing the reliability and efficiency of the region's electric system.

Progress of the wholesale markets

The region's future growth and economic health and the wellbeing of its consumers are directly linked to the availability of reliable, competitively priced energy.

• New England's wholesale power markets, demand response efforts and regional planning process are becoming models for the nation.
• Competitive wholesale markets have resulted in numerous economic and environmental benefits.
• ISO New England has created a solid foundation for the future, but enhancements to the markets are necessary to ensure that current and future energy needs of the region are met.

Public policy decisions have an impact on cost

• Sluggish regulatory actions and misguided opposition to continued development of restructuring in New England can add to the cost of electricity.
• When underlying cost drivers such as fuel prices increase electricity costs, the best course of action is to work together to enable the wholesale electricity markets to provide reliable service at the lowest possible cost. When assessing the value of new initiatives, policymakers should remain focused on the long-term benefits of competitive markets rather than short-term price fluctuations.
• Many potential increases in New England's electricity costs, such as those caused by global fuel markets, would occur regardless of market structure, and would not diminish if the markets were removed.

ISO New England management of the system

• ISO New England is the independent and impartial coordinator of the bulk power system and administrator of the wholesale electricity markets.
• ISO New England is obligated to ensure a reliable power system for today and for future generations.
• Because it is a not-for-profit company that is financially independent of companies doing business in the electricity markets, the region's consumers are the direct beneficiaries of ISO New England's work.

Challenges ahead

• New England's electricity system faces difficult but not insurmountable challenges: developing and maintaining sufficient capacity from generation and demand response, increasing fuel diversity, and fully realizing the benefits of the retail electricity market.
• These challenges do not undermine the concept of competitive wholesale electricity markets, but rather demonstrate the fact that the markets are still maturing.
• Turning the clock backward with a return to regulation would cause huge disruption in the markets and the industry, which could have unintended consequences, including cost impacts, on electricity service in New England.