New England consumers could be hit immediately with between $40 and $70 million in added energy costs if a proposal to create a Regional Transmission Organization (RTO) is approved, Attorney General Richard Blumenthal announced today.

Pointing to the results of a new study analyzing the cost impact of the proposed RTO, Blumenthal today joined with Massachusetts Attorney General Tom Reilly, Rhode Island Attorney General Patrick Lynch and consumer advocates from Connecticut, Maine, and New Hampshire in opposing ISO New England's plans to merge electricity operations across New England. The Attorneys General and consumer advocates today expressed their concerns about the proposed RTO in a letter to the members of the New England Power Pool (NEPOOL), a board comprised of New England's utilities and other electric market participants, which is scheduled to vote on the proposed RTO on Friday.

"This fatally flawed RTO proposal will raise rates, reduce accountability and reward market manipulation. It will increase the power and profits of transmission operators with an immediate $40 million price tag for consumers," said Blumenthal. "Utilities will be rewarded with windfall bonuses – out of consumers' pockets – for transmission facilities they are already obligated to provide. This RTO offers no benefits and numerous risks to New England's ratepayers."

The study, authored by Synapse Energy Economics, Inc., a Cambridge-based energy consulting firm, found that ISO-NE's plan to provide incentive pricing for transmission owners, would amount to between $849 million to $1.4 billion in rate increases to consumers over a 19-year-period.

While the report, commissioned by the Connecticut Office of Consumer Counsel, the Massachusetts Attorney General, the Maine Office of the Public Advocate and the New Hampshire Office of Consumer Advocate, found that transmission owners would benefit significantly from the proposed RTO, the same was not found to be true for New England consumers. According to the report, ISO-NE has not demonstrated how the additional $40 to $70 million will produce "any additional benefits to consumers."

In the letter to NEPOOL participants, Blumenthal called the proposed RTO "critically flawed and would represent a step backwards from achievements over the past several years." In recent weeks, Blumenthal has warned that the proposed RTO lacks important consumer protections and public accountability.

"ISO-NE has not clearly identified any net benefits to New England consumers, given that the current structure already resembles an RTO and utilities must build needed transmission facilities to fulfill their public service obligations," the letter states.

The letter to NEPOOL members provides the following analysis of the new RTO proposal that would:

• Raise rates while boosting profits for the existing transmission owners
• Reduce the ISO's accountability to the public for the rate impacts of their decisions
• Include inadequate independent market monitoring provisions to protect the public against market manipulation
• Pay additional incentives to utilities to construct new transmission facilities which they are already obligated to construct
• Make unnecessary changes – the current system already functions in an RTO-like fashion

Last year, Blumenthal joined with Attorneys General and consumer advocates from New England in opposing the creation of a RTO that would have merged the New England and New York grids. ISO New England, which operates the bulk electric power system for New England's 6.5 million electricity customers, dropped the plan after a cost benefit study showed that costs for New England consumers would rise while all the benefits would flow to New York.

If the plan is approved by NEPOOL, the proposal will be filed later in October with the Federal Energy Regulatory Commission (FERC) in Washington.

Click here to see copy of letter or click here to see report