The Board of Directors of ISO New England Inc. has approved the 2007 Regional System Plan (RSP07). This year’s comprehensive assessment shows marked progress in a number of areas, including demand- and supply-side resource development as well as significant upgrades to the transmission system serving the six New England states. Taken together, these advances demonstrate the effectiveness of a sound wholesale electric market structure and robust system planning to ensure electricity needs are met reliably and efficiently.

“Competitive wholesale electricity markets, when paired with a robust system planning process, are proving successful in addressing New England’s system needs,” said Gordon van Welie, president and CEO of ISO New England Inc. “The right type of demand-side, generation, and transmission infrastructure is being built where we need it the most. This indicates that New England’s system planning process is comprehensive, the marketplace is responding, and wholesale competition is achieving positive results to the benefit of the region’s residents and businesses.”

Advances in Transmission, Generation, and Demand-Side Resource Development

Among the areas of improvement is a growing confidence in and reliance on demand-side resources to fulfill regional reliability needs. New England’s Forward Capacity Market (FCM) has helped speed the development of demand resources, including demand response, conservation, and energy efficiency, as evidenced by the more than 1,200 megawatts (MW) of demand-response resources enrolled in ISO New England’s programs and the fact that over 2,000 MW of demand resources have expressed an interest in participating in the initial FCM auction in February 2008. These resources can reduce the need to construct or expand generation and transmission infrastructure, which can result in economic and environmental benefits.

RSP07 also indicates that interest in investing in supply-side resources is on the rise with over 10,500 MW of resources in the development pipeline as of May 25, 2007. This represents significant growth since the implementation of the Locational Forward Reserve Market and announcement of the Forward Capacity Market, both of which are designed to encourage greater investment in demand- and supply-side resources.

RSP07 tracks the progress of transmission projects over the past year. One hundred and eight major transmission projects out of over 350 projects identified in RSP06 are nearing completion or have met significant approval or construction milestones. Among these developments are three significant 345-kilovolt projects addressing some of the region’s most congested areas. In Boston, the first phase of transmission upgrades was completed in early 2007 and, in Southwest Connecticut, the first phase of a two-phase transmission project was completed in October 2006 with the second phase of this project proceeding on schedule. More than $1 billion has been invested in New England’s transmission system since 2002, including an important new tie with Canada. An additional $4 billion in transmission investment is planned over the next 10 years.

Ensuring Long-Term Reliability

RSP07 also identifies areas in need of additional development, namely further generation and transmission expansion, increased fuel diversity, and greater measures to fulfill environmental mandates. RSP07 observations include the following:

• Overall Resource Needs—New England’s peak electricity use is expected to grow at a rate of 1.7% per year over the next decade, making the FCM important in ensuring that New England has adequate resources. Assuming no resources are added or retired, an additional 60 MW of demand-side or generating resources will be needed by 2010, and a total of 3,500 MW would be required by 2016, to ensure reliability.
• Fuel Diversity—New England’s heavy reliance on natural gas for electricity production can pose reliability risks and high wholesale electric energy costs, particularly in winter when natural gas is also used to meet home heating needs. Although a significant amount of gas-fired generation can now switch to an alternate fuel when needed, additional dual-fuel conversions would provide reliability benefits. FCM provisions promote the availability of resources when most needed and should encourage more dual-fuel capability or firm gas contracts. Also assisting in diversifying the region’s fuel supply are the growing state requirements for Renewable Portfolio Standards, which increase the need for and thus stimulate the development of new renewable resources.
• Environmental Compliance—Emerging federal, state, and regional environmental regulations require fossil fuel plants to decrease emissions, thereby increasing the demand for renewable sources of energy and demand-side resources. ISO analyses show that meeting these requirements will be challenging for the region. Stronger conservation and energy-efficiency measures, the addition of low- or zero-emitting generation, or a combination of these measures will be needed.
• Transmission Improvements—To build upon the progress made to date, RSP07 identifies over 350 projects required throughout New England to maintain system reliability, improve the efficiency of system operations, and serve high-demand areas. Among these identified transmission improvements is a series of projects, referred to as the New England East–West Solution (NEEWS), which address a number of reliability issues affecting Connecticut, Rhode Island, and the Greater Springfield area in Massachusetts. Also under study is a possible new interconnection that could provide access to wind energy and additional Canadian imports, as well as short- and long-term improvements for the lower southeastern Massachusetts area.

In 2000, the Federal Energy Regulatory Commission assigned ISO New England the responsibility for coordinating regional system planning. RSP07 is a yearlong snapshot of the New England system resulting from an ongoing collaborative process that includes state regulators, transmission owners, and other market participants. Through this process, ISO New England leads the process to identify overall system needs and conduct transmission planning to define projects that address reliability and improve efficiency.