Power users face jolt; New charge sought by ISO.

• Position: NEWS

Byline: David Gram MONTPELIER, Vt. - The organization that dispatches electricity around New England is proposing a new system of payments to generators that state regulators say could add billions of dollars to the region's power costs. ISO-New England has asked the Federal Energy Regulatory Commission for permission to implement a new charge in the wholesale power market that regulators in the six states say could add $13 billion to consumers' power costs in the next five years. Officials at the Holyoke, Mass.-based ISO, which manages New England's power markets, argue the new payments are needed to encourage generators to stay in business and to encourage construction of new generators, especially in parts of the region that are short on power. The purpose of the "locational installed capacity," or LICAP, charge is "to send out a signal to the marketplace where new generating resources are needed," said ISO spokeswoman Ellen Foley. Those investments are crucial to the long-term reliability of the region's power grid, Foley said. An administrative law judge at FERC is expected next week to recommend a decision to the commission. A final decision is expected by early September, Foley said, with implementation tentatively set for Jan. 1. State utility commissioners and energy office officials around the region said yesterday they support ISO's efforts to ensure long-term reliability of the power grid. But they said they did not believe the ISO plan would do that. "Obviously we fully support measures that ensure reliability in New England ... but this proposal is unlikely to achieve that objective," said Thomas Getz, chairman of the New Hampshire Public Utilities Commission and president of the New England Conference of Public Utilities Commissioners. Getz added "the proposal reflects a surprising insensitivity to the financial burden that its plan will have on retail...