ISO New England
| Company type | Non-profit |
|---|---|
| Industry | Electric power transmission |
| Founded | 1997 |
| Headquarters | Holyoke, Massachusetts , United States |
Area served | Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont |
| Products | Bulk electric power system operation, wholesale electricity markets administration, regional planning |
Number of employees | 500+ |
ISO New England Inc. (ISO-NE) operates as an autonomous, non-profit regional transmission organization (RTO) based in Holyoke, Massachusetts. It provides services to the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
ISO-NE oversees the bulk electric power system and transmission infrastructure across New England, coordinating with member utilities as well as external entities such as Hydro-Québec, NB Power, and the New York Power Authority when required. The organization reliably manages a generation and transmission network with a capacity of 32,000 megawatts and establishes tariffs governing energy supply pricing, contractual terms, and conditions within the region.
Its responsibilities include ensuring the continuous reliable operation of the bulk power system on a daily basis, administering wholesale electricity markets at the regional level, and guiding regional planning initiatives.
Formed in 1997 under the direction of the Federal Energy Regulatory Commission as the successor to the New England Power Pool (NEPOOL), ISO-NE serves a vital function within New England’s electrical infrastructure.
It is important to note that ISO-NE’s grid does not cover remote portions of eastern and northern Maine located in Washington and Aroostook Counties. These areas’ power systems are managed by the Northern Maine Independent System Administrator, serving local utilities connected through NB Power.
History
The electric power sector in New England has undergone substantial transformation over recent decades. Prior to the 1970s, generation, transmission, and distribution were each controlled by regulated local utility monopolies functioning independently.
The Northeast Blackout of 1965, which resulted in power loss for 30 million customers, led to the creation of the Northeast Power Coordinating Council (NPCC) in 1966 to enhance system reliability. In 1971, private and municipal utilities across six states formed the New England Power Pool (NEPOOL) to promote regional cooperation.
Over the following three decades, NEPOOL established a regional grid encompassing more than 300 generating facilities and approximately 8,000 miles of transmission lines.
By the 1990s, New England faced challenges including high electricity prices and aging infrastructure due to limited competition. In response, Congress alongside the Federal Energy Regulatory Commission (FERC) initiated wholesale market reforms aimed at fostering competition, improving service quality, lowering costs, and encouraging capital investment.
FERC mandated nondiscriminatory access to transmission networks and encouraged utilities to divest power plants while transitioning from regulated rates to market-driven pricing. The 1996 FERC Order 888 deregulated segments of the electricity market. Subsequently, in 1997 ISO New England was established to manage the regional bulk power system and introduce new wholesale markets with open transmission access. By 1999, ISO assumed control over restructured wholesale electricity markets.
In 2005, ISO New England attained Regional Transmission Organization (RTO) status. The organization introduced the Forward Capacity Market in 2008 to ensure adequate resource availability for demand and reliability requirements, completing its implementation by 2010.
Creating independent system operators
The Federal Energy Regulatory Commission created independent system operators (ISOs) to oversee regional electricity restructuring efforts focused on maintaining system reliability and supervising competitive wholesale markets.
ISO New England received FERC approval in 1997 to serve six states. While five states adopted retail choice programs allowing divestiture of power plants to boost competition, Vermont chose not to participate and retained ownership of its utilities’ generation assets. ISO New England’s governance includes a board and workforce exceeding 500 employees who maintain no financial ties to market participants.
Transition to Market Operations
In 1999, ISO New England partnered with the New England Power Pool—a collective of generators, utilities, marketers, public power entities, and end users—to initiate wholesale electricity markets. This platform now supports nearly 400 participants conducting transactions valued at about $10 billion each year.
By 2003, ISO New England implemented the Standard Market Design (SMD), which introduced a Day-Ahead Market aimed at minimizing price fluctuations. Additionally, locational pricing was established to enhance market efficiency by accurately representing the actual costs of electricity production throughout the region.
Enhanced Governance and Oversight via RTO Status
ISO New England was officially designated as the regional transmission organization (RTO) in 2005, granting it expanded control over transmission operations and increased autonomy in managing the grid and wholesale markets across six states, serving a customer base of approximately 6.5 million.
Nevertheless, in 2021, ISO New England encountered criticism concerning market regulations that resulted in elevated bid prices for renewable energy compared to other generation sources. This situation led to higher expenses for consumers and increased emissions. In February 2022, ISO New England rescinded an earlier policy that had supported the advancement of clean energy projects—specifically solar and wind—thereby postponing development timelines by two or more years and raising concerns among industry stakeholders about potential setbacks to the clean energy transition.