ISO New England Prepares Region's Power System for Future Extreme Winter Weather Events; Region's Grid Operator Details Power System Conditions During Recent Cold Snap.

Energy Editors/Business Editors

HOLYOKE, Mass.--(BUSINESS WIRE)--Jan. 27, 2004

ISO New England Inc., the operator of the region's bulk electric power grid, today said that since weather forecasts indicate that below average temperatures may persist, ISO New England will continue to safeguard power system reliability by applying the real-time operational experience it gained during the extreme winter weather on January 14, 15 and 16 in forecasting and dispatching the power system through the remainder of this winter.

"ISO New England gained valuable experience as winter records were broken across the board during the recent cold snap -- for January temperatures, winter electricity demand, and generation outages. We have never seen weather conditions affect power system resources as it did on those three days," said Gordon van Welie, president and chief executive officer of ISO New England Inc.

During the extreme weather conditions experienced across New England from January 14 through January 16, ISO New England managed the region's bulk power system in a manner that protected the reliability of the power grid and the health and safety of New England's 14 million consumers.

"Our job is to maintain the reliability of the region's bulk electric power system and manage competitive electricity markets. On January 14, 15, 16, our actions accomplished that," said van Welie. "Not only did we successfully manage events as they unfolded, but we also kept the lights on in New England. We will take the same steps to safeguard the region's bulk electricity system should similar events occur again this winter."

The recent cold snap caused extreme fluctuations in the region's power supply. Subzero temperatures, coupled with high winds, led to unprecedented winter demand for electricity, power system equipment failures, and a high demand for natural gas, which serves as the primary fuel for nearly 40% of the region's power plants. ISO New England took immediate steps to maintain a reliable electric power supply, which included the following:

-- Imported available electricity from New York;

-- Requested voluntary conservation;

-- Halted power plant and transmission line maintenance;

-- Denied all new requests for power plant outages;

-- Recalled into service power plants previously granted outages;

-- Called for staffing of critical substations in the event

rolling blackouts and system restoration were necessary;

-- Called for staffing of peaking power plants to ensure critical

electricity deliveries;

-- Briefed state and federal regulators on the situation; and

-- Worked closely with members of the natural gas industry.

"We carefully considered and used these steps because of the unpredictability of the system at the time," van Welie said. "We were seeing high levels of volatility in our power supply, making the region susceptible to unforeseen events that can occur within seconds, such as what was experienced on August 14, 2003."

Because of the uncertainty of how the sustained subzero temperatures would affect power system resources Thursday evening and Friday morning, January 15-16, ISO New England decided to prepare for the possibility of rolling blackouts and quick system restoration by calling for the staffing of critical substations across New England. This precautionary step was necessary to control and protect the region from a potential cascading event, similar to the circumstances on August 14th. An uncontrolled event could adversely affect sensitive service providers such as hospitals. The decision to issue an advisory to the public about the preparations for rolling blackouts was made after consultation with the regulatory commissions of the six New England states and other state officials.

ISO New England has initiated a review of system operations, wholesale electricity market results, and dependencies with the natural gas market. ISO New England will be working closely with the Federal Energy Regulatory Commission, the New England Conference of Public Utilities Commissioners, market participants, and the gas industry to ensure that market rules and operating procedures during extreme winter weather conditions are consistent with bulk power system reliability and efficient markets. This review will serve as a foundation for long-term recommendations for continued power system reliability and fair and efficient wholesale markets.

ISO New England has already met with state and federal regulators on Friday, January 23 in separate meetings in Nashua, New Hampshire and Washington, D.C., to provide them with a status report of both system conditions and its internal review. ISO New England will continue to provide timely updates to stakeholders as its internal review progresses.

For more than five 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 32,000 megawatts. 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.