You asked for information on the power sharing agreement between the Independent System Operator (ISO)-New England and the New York ISO.

SUMMARY

In June 2001, the ISOs agreed to share generation reserves to respond to facility interruptions. The reserves consist of generating capacity at power plants that can be turned on quickly if another power plant shuts down unexpectedly or a transmission line fails. The ISOs have taken several other steps to integrate the wholesale market in the two regions and to facilitate shipments of electricity. Additional information on these initiatives is available on ISO-New England's Website, http: //www. iso-ne. org.

POWER SHARING

In June 2001, the ISOs agreed to share generation reserves during periods of generation or transmission interruptions, e. g. , when a power plant shuts down unexpectedly or a transmission line fails. (The agreement grew out of an initiative that began in January 2001. ) Under industry standards, generation reserves must be available at all time to protect against these events. The agreement covers two types of reserves, consisting of plants that can generate power within ten minutes of an interruption and plants that take somewhat longer to come on-line. The agreement allows each region to count on reserves being made available by the other region in the event of an interruption. It is designed to provide flexibility in responding to interruptions and help maintain reliability. The agreement does not affect total reserve requirements for either region. The agreement goes into effect after the ISOs have taken several steps to address the interruption, including asking (1) those customers who have agreed in advance to reduce their demand to do so and (2) customers that own generation capacity and have contracted with the ISO to make it available to do so. Currently, each ISO can provide up to 300 megawatt of reserves.

RELATED DEVELOPMENTS

In January 2002, the ISOs agreed to develop a wholesale electric market for the two regions based on a common market design. Differences in the ISOs' rules governing the pricing and dispatch of power (determining which plants and transmission lines to use at any given time) have led to the existence of "seams" between the two regions, impairing the flow of electricity between New York and New England. The ISOs also agreed to evaluate the feasibility of creating a regional transmission organization (RTO), which would manage the wholesale market across New York and the New England states.

In June 2002, the ISOs announced that they had approved filing a joint proposal for the creation of an RTO with the Federal Energy Regulatory Commission (FERC). The actual filing will be made in August, 2002, at FERC's request, to give it time to work with interested parties on seams issues and to address issues raised in connection with its proposed Standard Market Design regulations. These regulations will govern RTOs across the country.

The ISOs are working to eliminate the seams consistent with the implementation plan presented to FERC on June 12. This plan calls for eliminating the remaining seams and implementing the Standard Market Design in New England and New York during 2003.

Also in June 2002, the ISOs agreed to shared generation regulation services across the seven states that they serve. These services provide moment-by-moment balancing of generation and demand on the system, much like cruise control maintains a constant speed on an automobile. In cases of inadequate or excess supply at any time, generators within a region increase or decrease generation to restore the energy balance within the region. Through the shared regulation service, the ISOs can help each other perform this task more efficiently.

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