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Energy industry claims power drain by 2008
CONNECTICUT POST - November 10, 2005
By Rob Varnon rvarnon@ctpost.com

A new association of utility companies called on politicians and regulators Wednesday to quit squabbling over policy that's holding up infrastructure improvement and hammer out compromises before the lights go out in New England within a few years.

The New England Energy Alliance, comprised of power plant owners, electricity transmission and natural gas companies including Berlin-based Northeast Utilities System, unveiled a study that said New England will have trouble keeping the lights on by 2008 because demand for power is outstripping supplies.

Susan Tierney, a consultant with Boston-based Analysis Group Inc. and a former assistant secretary for the U.S. Department of Energy, authored the report.

"It's only on the eve of some potential crash that people get worried," Tierney said during a conference call, adding that the time for worry is now.

Tierney said that the region needs to upgrade its natural gas infrastructure, expand the use of new technology to diversify energy sources, start building new power plants and upgrade electric transmission lines.

"This is not a build our way out of the problem," she said, noting that the region will have to use energy more efficiently and conserve as well.

In her study of the New England system, Tierney said that one of the reasons that investment in new infrastructure has not occurred is because of the lack of clarity in market rules. Specifically, Tierney said a battle between the states and the Independent System Operator New England, the region's electricity grid operator, over how to encourage more power plant development has been counterproductive.

The states, including Connecticut, oppose the ISO's Locational Installed Capacity plan, which pays power plants more money to produce power in areas that use more electricity than they produce.

The association's president, Carl Gustin, refused to pick a side on the issue, although many of the alliance's members support the ISO's position.

Tierney said that the two sides have to come together to work out their differences so work can start on major projects, which can take four years to complete.

She noted that the national Energy Act signed into law this year provides a lot of incentives for building power plants and upgrading infrastructure, but until policy issues in New England are resolved, nothing will happen.

The alliance also conducted a 600-person, representative poll of New England voters and found that they ranked energy prices and reliability among their top three concerns behind health care costs and job creation.

Gustin, the association president, said the organization's next step will be to set an agenda to push politicians and regulators to address these problems.

Rob Varnon, who covers business, can be reached at 330-6216.