Reps. Allen and Michaud, Other NE Members Appeal to FERC over Proposed Massive Electricity Rate Hike

Reps. Allen and Michaud, Other NE Members Appeal to FERC over Proposed Massive Electricity Rate Hike

Maine's Congressmen call LICAP "a disaster for Maine families struggling to pay utility bills and for Maine businesses competing with firms in other states"

Washington, D.C.---U.S. Representatives Tom Allen and Michael Michaud announced today that they have joined a group of New England House Members and Senators to urge the Federal Energy Regulatory Commission (FERC) to reject the ISO New England's Locational Installed Capacity Proposal (LICAP) to raise electricity rates across the region by billions of dollars beginning January 1, 2006. The legislators detailed their concerns in a letter to FERC Chairman Joseph T. Kelliher.

"LICAP would be a disaster for Maine families struggling to pay utility bills and for Maine businesses competing with firms in other states that pay less for their electricity. With current gas prices, Maine families are already being squeezed enough without their electricity bills rising," Representatives Allen and Michaud said. "ISO New England's own proposal concedes that LICAP will cost Maine electric consumers $344 million over the next five years. Other estimates run as high as $917 million. Maine already generates more electricity than we use and entrepreneurs have proposed building even more power plants in Maine without the LICAP's ‘incentives.' We call upon FERC to reject LICAP and tell ISO New England to come up with a fair proposal that will not damage Maine's economy or unfairly penalize Maine's people."

ISO New England, the regional transmission organization serving Maine, Connecticut, Massachusetts, New Hampshire, Rhode Island and Vermont, claims that LICAP would provide power plant owners the incentive to build new power plants. Opponents argue that LICAP will result in the largest rate hike in history on New England energy consumers with no guarantee of additional generating capacity to meet future electricity demand. Among those who have voiced their opposition are Maine Governor John Baldacci, Maine Public Advocate Stephen Ward, Maine Public Utilities Commission and Energy East/Central Maine Power Company.

"New England currently has adequate supplies of electricity -- in fact, there is a surplus of generation that will last until the end of the decade," the Members' letter to FERC states. "In the face of this surplus, the proposed LICAP rule, if approved by FERC, would result in the largest rate increase in the history of New England becoming effective on January 1, 2006."

Analyses of LICAP forecast that it could force New England residential, commercial and industrial electric customers to pay an additional $13.5 billion over the next 5 years to companies that own power plants in the region with no guarantees that the companies would build new power plants or that the electricity from new plants would be made available to New England consumers.

"Because the LICAP payments are only ‘incentives,' this money will go to generators without any requirement or commitment from them to build any power plants," the Members' letter adds. "It is therefore entirely possible that ratepayers could spend $13.5 billion for nothing. We therefore urge the Commission to reject the ISO-NE LICAP plan, and to instead direct ISO-NE to go back and consult with all affected stakeholders to come up with alternative mechanisms for ensuring our region's wholesale electricity markets function properly and that rates charged in such markets are just and reasonable and not unduly discriminatory or preferential - as is required under the Federal Power Act."

Other New England Members of Congress who signed onto the FERC letter include Senators Lincoln Chafee (R-RI), Edward Kennedy (D-MA), John Kerry (D-MA) and Representatives Michael Capuano (D-MA), Rosa DeLauro (D-CT) Barney Frank (D-MA), Nancy Johnson (R-CT), Stephen Lynch (D-MA) Edward Markey, James McGovern (D-MA), Richard Neal (D-MA), James Olver (D-MA), Christopher Shays (R-CT), Bernie Sanders (I-VT) and John Tierney (D-MA).

http://tomallen.house.gov/showart.asp?contentID=1648&IssueID=1&ID=