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licap

After several years of hard work, Senator Lieberman, working together with the Connecticut Congressional Delegation and state officials, won their battle to save Connecticut electricity consumers $800 million - or half - of the rate-hike federal regulators and electric companies had in store for them for the next four years. Their victory took the form of the reversal of a plan by the operator of New England's power grid to split the State of Connecticut into two zones for electricity pricing. The plan, called Locational Installed Capacity (LICAP), would have meant $1.6 billion in higher prices for Connecticut consumers. for the sake of a risky scheme for providing financial incentives to Connecticut's energy producers to increase the state's electric generation capacity. In June of 2006, after more than two years of Herculean advocacy and legislative efforts on the part of Senator Lieberman and the delegation, the Federal Energy Regulatory Commission (FERC) approved an agreement reducing by half the electricity-rate increase that LICAP would have imposed.

LICAP: Timeline

February 2004: The operator of the New England Power Grid (ISO) announces an ineficient and overly costly plan to address a shortage in capacity and problems with reliability. The plan, called Locational Installed Capactiy (LICAP) involves increasing electricity rates in individual sub-regions--most dramatically in Southwestern Connecticut--a supposed incentive to construct new capacity in those sub-regions.

Lieberman sends a letter to the ISO criticizing the LICAP proposal, which would add $1.6 billion to the bills of Connecticut's electricity customers over four years.

March 2004: Senator Lieberman and the CT congressional delegation convince the FERC to postpone its decision on approving LICAP, to allow for a negotiated solution to New England's reliability and capacity problems.

November 2004: FERC ignores the postponement request and provisionally approves the LICAP plan.

July 2005: Senator Lieberman convinces the House-Senate Energy Conference Committee to include language in the Energy Policy Act of 2005 urging FERC to consider carefully the objections of states like Connecticut to LICAP.

August 2005: Senator Lieberman's LICAP language becomes law with the passage of the Energy Policy Act on August 8, 2005.

FERC immediately announces that it would postpone implementing LICAP pending further negotiations.

September 2005: Senator Lieberman and the CT delegation redouble their efforts to urge FERC not to approve the LICAP plan.

October 2005: FERC appoints a settlement judge to oversee a negotiated resolution.

March 2006: An agreement is reached. It reduces by half the electricity-rate increase that LICAP would have proposed. According to the Connecticut State Consumer Counsel, the settlement will save Connecticut ratepayers $800 million over four years when compared to LICAP. The head of the Consumer Counselm, Mary Healey, called the settlement "truly historic in the positive impact it will have."

June 2006: FERC approves the settlement. The language Senator Lieberman fought to include in the Energy Policy Act of 2005 describes the events that led to the settlement and features in the FERC order's procedural history section.

Related Press Releases

Lieberman Warns New Energy Proposal Would Mean Higher Prices for CT Consumers-November 9, 2004
Dodd, Lieberman Commend Resolution Urging Regulators to Reconsider CT Electricity Rate Increase-July 22, 2005
Statement of Senator Joe Lieberman on Final Passage of the Energy Policy Act -July 29, 2005
Connecticut Delegation: Energy Pricing Proposal "Fatally Flawed"-August 9, 2005
Dodd, Lieberman Note Important Victory in LICAP Case-August 10, 2005
CT delegation sends letter to FERC opposing electricity rate increase-September 12, 2005
Connecticut Delegation Urges FERC to Reject LICAP-September 19, 2005
CT Congressional Delegation Warns FERC to Quash LICAP Plan-September 20, 2005
Lieberman Reaction to FERC Appointment of Judge in LICAP Proceeding-October 24, 2005

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