04/06/2020 - Electricity Law Initiative

Electricity Law Initiative Explores Utility Withdrawal from ISO-NE

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Across the Northeast and Midwest, state officials are expressing frustration with recent FERC decisions that make achieving state energy policy goals more expensive and are looking for alternatives to the FERC-regulated markets. In New England, the head of Connecticut’s Department of Energy and Environmental Protection (DEEP) announced earlier this year that she is exploring options for extricating the state’s utilities from the FERC-regulated regional capacity auction. In response to these developments, Ari Peskoe explores the legal path for a more drastic separation – full withdrawal of a utility from the regional transmission organization.

Ari concludes that withdrawal from ISO-NE is a legally plausible option for a utility seeking to escape from unfavorable market rules but it comes with considerable uncertainty. The utility’s post-withdrawal operations would rely on third parties to provide transmission and reliability services, and Ari speculates that NYISO may be well-positioned to provide those services. In addition, any value the utility and its ratepayers might derive from withdrawal would depend in part on the terms of the post-withdrawal ISO-NE tariff. FERC could block withdrawal and may be more inclined to do so if ISO-NE or a New England utility protests withdrawal.