New England grid operator agrees to cost-cutting

ISO-New England settles dispute with 4 states, agreeing to cost-cutting, budget details

Associated Press

HARTFORD, Conn. (AP) -- New England's electric grid operator agreed to cut nearly $3 million in spending and end a pension plan for new employees in a settlement filed with federal regulators on Monday in response to complaints of excessive spending from officials in four states.

In the agreement filed with the Federal Energy Regulatory Commission, ISO-New England also promised to provide spending details to attorneys general and consumer advocates in Connecticut, Maine, New Hampshire and Rhode Island. Officials in those states complained last year to federal regulators that ISO-New England's $165 million budget request for 2013 had "grown exponentially, seemingly without regard to poor economic conditions."

Massachusetts intervened in the case and will receive budget details from ISO.

State officials, sensitive to rising electric rates that have become thorny political issues, demanded greater involvement by the states in the regional grid operator's spending decisions.

"While the impact of the ISO budget on monthly electric bills is small, there is an important principle at stake here," said Arthur House, chairman of Connecticut's Public Utilities Regulatory Authority. "That principle is that costs borne by ratepayers — including the ISO budget — must be subject to careful scrutiny and review."

ISO, based in Holyoke, Mass., said it was pleased to resolve the issue and defended its $165 million budget as "just and reasonable" and was overwhelmingly approved last year by generators, utilities, transmission owners and others.

"The ISO recognizes that opinions about the appropriate level of spending vary, which is why an intensive budget review process for New England states and stakeholders already exists," it said in a statement.

ISO agreed in the settlement to explain budget details when necessary and highlight items about increases of more than 5 percent or $500,000, whichever is higher. It also agreed to not run up administrative expenses of more than $162.7 million for 2013, a cut of about $2.3 million from spending proposed last October.

ISO also agreed to reduce capital spending by $600,000 and will switch to a defined contribution retirement plan such as a 401(k) from a pension plan for employees who begin work in 2014.

ISO also agreed that, beginning with its 2014 budget, it will no longer include the cost of golf tournaments or charitable contributions in its rates.

Connecticut's consumer counsel, Elin Swanson Katz, said ISO's budget reduction "is a step in the right direction." Its budget increased by more than one-third in the last four years, she said, saying the increases are not "sustainable or appropriate."

The agreement must be approved by a judge.

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