Press Release

Washington, D.C. -- The Pennsylvania Public Utility Commission (PUC) today testified before the Federal Energy Regulatory Commission (FERC) on establishing a Northeast Regional Transmission Organization (RTO).

"Pennsylvania has a very vibrant market thanks to electric competition," PUC Chairman Glen R. Thomas said. "We believe that if a Northeast RTO is established properly, FERC can make Pennsylvania’s market -- and our region’s market -- even stronger."

Chairman Thomas today presented the testimony on behalf of fellow Commissioners Robert K. Bloom, Terrance J. Fitzpatrick and Aaron Wilson Jr.

"The Pennsylvania PUC supports the formation of a Northeast RTO," Chairman Thomas said in the PUC’s testimony. "However, that support is contingent upon the development of market rules, operational standards, data-interchange protocols and measured steps to resolve seams issues that result in the gradual convergence of the three regional markets. This can and should be accomplished while implementing workable RTO governance and a meaningful stakeholder process. If this orderly convergence can be achieved, all states served by the new RTO will benefit.

"Again, as a general proposition, the Pennsylvania-New Jersey-Maryland Independent System Operator (ISO) -- ‘PJM’ -- is the most appropriate platform, which, combined with best practices from other regions, would provide the best path for the development of a Northeast RTO. From an economic and operational perspective, this statement is based upon the successful operation of PJM’s markets over the past four years. Our contention is also based upon our own experience with the PJM ISO, the level of trust the ISO engenders, and the level of cooperation we have received as we implemented retail competition.

"We recommend the PJM market model, because, simply put, the PJM market model works. It works because it is well thought-out, and the end product of stakeholder participation. It works because it sends proper price signals. It works because the ISO is truly independent which is essential in maintaining the ‘trust factor’ an ISO or RTO must have. It works because the governance of PJM does allow for change -- perhaps not as rapidly or in the directions some would like -- but the mechanisms are there for stakeholders to submit amendments, argue for them, and have the ISO make necessary changes. These tried and proven systems can and should be carried forward in RTO formation."

Chairman Thomas testified as part of a series of FERC workshops on RTO issues, including congestion management; cost recovery; market monitoring; transmission planning; business and reliability standards; and the nature of transmission rights. The FERC is considering RTOs for the Midwest, the Northeast and the Southeast, and is expected to approve these RTOs by early November.

As part of his testimony, Chairman Thomas presented the following snapshot of the strength of electric competition in Pennsylvania:

• Pennsylvania has the No. 1-in-the-nation electric-competition program;
  
  
• Electric competition has saved employers and families nearly $4 billion;
  
  
• Up to 1 million Pennsylvanians have cumulatively shopped for power. Nearly 600,000 currently are shopping;

• Nowhere in Pennsylvania are customers paying more for electricity than they were in 1996 -- before Electric Choice. And every Pennsylvanian has the choice;

• Before competition, electric rates were 15 percent above the nation’s. Now, electric rates are 1 percent below the nation’s;
  
  
• According to a new report issued this summer, lower retail electricity prices will lead to the creation of 40,700 full-time and part-time jobs by 2005;
  
  
• The PUC has hosted 110 delegations from 59 countries that want to learn more about the success of Electric Choice -- helping to make Pennsylvania the No. 1 destination for international delegations;
  
  
• Pennsylvania is home to a world-class Independent System Operator -- PJM -- and utilities that are becoming the nation’s standard. PJM has added 6,000 megawatts of power since 1996 -- an increase that came about in large part because the market sends the right price signals. That increased generation capacity will keep rates down for the entire region. This has been done without compromising reliability;
  
  
• Nearly 120,000 Pennsylvanians now use "green power" -- more than any other state; and

• Pennsylvania soon will be home to five wind farms -- meeting the demand for renewable energy. This proliferation of green power and wind farms would not be possible without competition.

The PUC is charged with ensuring Pennsylvania consumers have access to safe, affordable and reliable electric, natural gas, water, telephone and transportation service, as well as serving as stewards of competition.