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LICAP Settlement

LICAP Settlement. Joseph W. Rogers Chief, Utilities Division Massachusetts Office of the Attorney General. Diverse Coalition Opposed To Settlement. Massachusetts and Maine Oppose The Settlement Attorney General of Massachusetts Attorney General of Connecticut

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LICAP Settlement

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  1. LICAP Settlement Joseph W. Rogers Chief, Utilities Division Massachusetts Office of the Attorney General

  2. Diverse Coalition Opposed To Settlement • Massachusetts and Maine Oppose The Settlement • Attorney General of Massachusetts • Attorney General of Connecticut • NSTAR Electric & Gas Corporation • NEPOOL Industrial Coalition • The Energy Consortium • Massachusetts Department of Telecommunications and Energy

  3. Diverse Coalition Opposed To Settlement, cont. • Maine Public Utilities Commission • Maine Public Advocate • Industrial Energy Consumer Group of Maine • Massachusetts and Maine Represent 53.4% of NEPOOL Peak Demand

  4. Unbalanced Process From the Start • ISO-NE Filing Was A Moving Target • First Filing April 25, 2003 • Second Filing August 31, 2004 • Third Filing November 4, 2004 • Load Serving Entities Offered Targeted and Less Costly Alternatives That Were Stricken • Mass AG, et al Protest – March 22,2004 • Daly Testimony – November 4, 2004 • Congress Ordered FERC To Consider Alternatives

  5. It’s Better Than LICAP • The Choice Between The Noose and the Firing Squad Is No Choice At All • Lesser of Two Evils • Settlement Does Not represent An Arms Length Agreement • Clear That LICAP Order Would Be Imposed If There Was No Agreement

  6. Settlement Fails To Address Issues of The Case • FERC’s Goals • Elimination of Reliability Must Run (RMR) Agreements • Compensation For Seldom-Run Units Needed For Locational Reliability • Settlement • Does Not Resolve RMR Issue • Throws Money At All Resources Regardless Of Need

  7. Transition Payments Are Unlawful And Unreasonable • $5 Billion For Absolutely Nothing • Wealth Transfer From Consumers To Coal And Nuclear Plant Plants of $240 million in 2007 Alone • Payments Cannot Be Justified Based On Either Market Conditions or On Cost-of-Service Grounds • Some Resources Are Paid Higher Than Either Market or Cost

  8. FERC Lacks Jurisdiction • Section 201 of the Federal Power Act • Reserves To The States Authority Over Generation, Including How Much Utilities Must Own or Control • No Evidence That: • Existing Capacity Market Is Unjust and Unreasonable. • All Generation in New England Needs Additional Revenue. • Market Will not Produce Resources When Needed.

  9. Forward Capacity Market • Not A Market • Complex System of Price Supports • Rules Have Yet to be Developed • Totally Under ISO-NE Control • What Qualifications Do They Have? • Lack Accountability For “Market” Results

  10. Concerns With Organized Markets • Today’s Organized Markets Are Not Working For Customers. • FERC Is Attempting To Re-regulate Electric Markets With Mechanisms Such As LICAP And The Reliability Pricing Model (RPM). • Attempting To Alter Market Results By Providing Subsidies to Generators, Whether They Need Them Or Not, With No Guarantee Of New Generation.

  11. Solutions • Fix the RTOs • Address Market Power Issues • Create Energy-Only Markets • Establish Demand Response • Build Adequate Transmission • Eliminate FERC Interference With State Resource Adequacy Determinations

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