Report Examines Comparatively High Expenses For New England's Power Grid Operator

Mar 14, 2018

New England residents are charged some of the highest consumer rates for power in the country. This comes as the budget for the region's electric grid operator rose by more than 30 percent over five years.

Reporter Greg Hladky for The Hartford Courant looked at tax filings by ISO New England and similar operators around the country. I asked him first to explain what the grid operator does.

Greg Hladky, Hartford Courant: [ISO New England] manages the entire energy grid for all of New England. It monitors the energy production from power plants. It also stages auctions where power suppliers can bid to supply energy into the grid system.

Essentially, they're running all the lines -- transmission lines, pipelines -- and keeping track of what's going through, and how much is needed. Theoretically, they are there to make sure there is power going into everybody's homes, and people's homes are getting heated.

Carrie Healy, NEPR: That doesn't become any more important than it does after our third nor'easter in just a couple weeks. So it has a pretty hefty budget too, you found.

Yes. For example, in 2016, they had revenues of $181.6 million. That might not be extraordinary, except that all that money is essentially coming from ratepayers: electricity ratepayers, natural gas ratepayers.

It comes through the companies that use the grid system, but those companies pass those costs on to ratepayers. 

And the interesting thing that I found was comparing the increase in ISO New England’s budget to other independent system grid operators across the country from 2011 to 2016.

According to their filings with the federal government, ISO New England’s revenues and expenditures rose by more than 30 percent. That was much faster, for example, than New York ISO, California ISO, and the Midcontinent ISO, which were the other ones I looked at for that time frame.

How do they account for how they spent the money? This is a nonprofit, right?

That's the other part of this. Yes, it's a nonprofit. Theoretically, they are there to protect the interests of the ratepayers, and make sure that their supplies are sufficient. 

They do have a lot of high-paid people at ISO New England, as other ISOs do across the country.

The officials at the New England grid operator said that these increases were the result of inflation, pension cost increases, additional market monitoring, and added staff for cybersecurity to prevent people from hacking into the system. 

They also claim that it was unfair to compare ISOs across the country. They're operating in different regions, and sometimes under different state and local regulations. 

On the other hand, the kind of records that I looked at are the records required for all nonprofits to file with the IRS. They say that these are not excessive, but for example, the same time frame 2011 to 2016, ISO New York’s revenues increased by 13.4 percent, California ISO’s income went up by 11.6, and Midcontinent ISO for those five years was just 5.4 percent.

This is not your first rodeo in deep dives. Is this story any different, say, if you had put a different corporation at the center of this? Maybe if this is Amazon, or somebody else?

Well, the fact that it's a nonprofit is what makes it interesting. And the fact that the revenues are coming out of ratepayers’ pockets makes it more interesting!

The other part of this is that there's a long background here with states like Connecticut and Massachusetts, and others in New England, complaining about past large revenue increases. In several instances, Connecticut and other states went to federal court claiming that these increases in revenues and salaries were too high and they got shot down.

What’s the feedback been on this report since it came out?

I've had a number of Connecticut state officials looking at it. I don't know that there's been any official action.

After a state agency files repeated complaints with ISO New England, with the Federal Energy Regulatory Commission, with federal courts, and it doesn't get anywhere, I think they get reluctant to go back in and beat up against the stone wall.