ISO New England Inc., the region's transmission companies, the New England Power Pool (NEPOOL), and certain NEPOOL participants today jointly filed an agreement with the Federal Energy Regulatory Commission (FERC) that, upon approval, facilitates ISO New England's transition to a Regional Transmission Organization (RTO).

"This is another important step in the effort to restructure the regional wholesale electricity markets," said Gordon van Welie, president and chief executive officer of ISO New England Inc. "The creation of an RTO will clarify ISO New England's responsibilities and the role of the region's stakeholders so that power system reliability will be maintained and fair and competitive wholesale electricity markets will be enhanced."

The joint filing follows several months of negotiations among the parties and resolves certain key transitional issues that were left outstanding when FERC granted ISO New England conditional approval as an RTO in March. If FERC approves the settlement agreement, ISO New England could begin operating as an RTO after giving 30 days notice to FERC and the region's stakeholders.

According to the settlement agreement, the role of NEPOOL, a voluntary association of entities that participate in the region's electricity industry, will be modified to provide the stakeholder process that ISO New England will rely on for advisory input. A sixth NEPOOL sector, for alternative energy companies, will also be created. In addition, the agreement resolves issues surrounding the disposition of NEPOOL's tangible assets.

"The NEPOOL members have virtually all supported the creation of an RTO for New England," said Donald Sipe, NEPOOL's elected chairman. "This settlement facilitates that creation by finding common ground among the NEPOOL members, ISO New England, and the transmission owners to transform an earlier proposal to one that enjoys broad support by all segments of the industry. We're pleased that the parties are working together to achieve an RTO for the region."

ISO New England's designation as an RTO will solidify ISO New England's role as the independent operator of the regional power system to build on the foundation established in the first five years of competitive wholesale markets.

As an RTO, ISO New England will clarify the roles and responsibilities of ISO New England, transmission owners, market participants and other stakeholders, enhancing accountability, transparency and consistency. The RTO designation also strengthens the independence of ISO New England, while ensuring that stakeholders continue to have a high degree of input.

ISO New England will continue to perform all of its current responsibilities and will become the regional transmission provider, exercising operational control over the regional transmission system to protect reliability. Transmission companies will continue to own, physically operate, and maintain their facilities, and be paid for the transmission services they provide. But, as an RTO, ISO New England will also be in a position to direct the expansion of existing transmission lines or construction of new ones when needed for reliability, subject to transmission owners' cost recovery and state siting processes.

"As an RTO, we will be able to address the needs of today's power system with greater independence and authority, and plan for the future with a more defined role," van Welie said. "We will do so with collaboration and input from the region's stakeholders through an active participant process. This is especially important as we carry out long-planned, critical initiatives to promote efficiencies and enhancements to the regional transmission system and the wholesale marketplace."

Equally important, ISO New England will continue to be the single point of control to effectively maintain reliability and preserve the integrity of the power system on a daily basis and in emergency situations.

"An important lesson learned from last year's blackout was the importance of clear coordination among areas that have multiple control centers," van Welie said. "RTO designation will ensure that there is always - and only - one set of hands on the wheel."

The RTO designation will also: -- Continue and enhance the regional system planning process that identifies New England's electricity needs and promotes new generation, transmission, demand response and other infrastructure improvements where they are most needed; -- Phase in a collaborative regional planning process that will expand to fourteen northeast states, as well as the District of Columbia, in an effort to coordinate resources and determine needs; -- Facilitate the creation of a "virtual" wholesale electricity market that will increase the flow of economical, surplus power from upstate New York and elsewhere when it is needed - and enable the export of surplus power when it is available; and -- Eliminate trade barriers that exist at the "borders" of the various Northeast states and Canadian provinces that hamper trading and add to the cost of electricity.

"Our mission - to ensure the reliability of the bulk power system and the wholesale electricity markets - has been clear since we were created in 1997," van Welie said. "This agreement allows us to take the next steps to fulfill that mission."

For more than seven years, ISO New England Inc. has been the not-for-profit corporation responsible for the day-to-day reliable operation of New England's bulk generation and transmission systems with an installed capacity of approximately 32,000 MW. In addition to operating the bulk power grid, ISO New England is the administrator of the region's wholesale electricity marketplace and the Open Access Transmission Tariff on behalf of the New England Power Pool.