January 5, 2004
Power broker | Don Sipe, newly appointed chair of the New England Power Pool, urges business to make itself heard when electricity rules are made
By Michaela Cavallaro
If Don Sipe has one message he wants to get across during his term as chair of the New England Power Pool, it's that businesses can have an impact on the way rules ˆ and therefore prices ˆ for electricity are established.
"A huge portion of electricity costs is controlled by what happens when rules get made," Sipe says. "Businesses have an opportunity to have their voices heard. The savings could be tremendous."
Sipe should know. A lawyer in Portland-based Preti Flaherty's Augusta office, he's worked in utility law since the late 1980s. For much of his career, he's advocated for business interests related to utility regulation. He's been involved with the New England Power Pool, known as NEPOOL (pronounced "nee-pool"), since the late 1990s. The organization is the rule-making body for the electric industry in New England and, as Sipe tells it, "in the bad old days, it was dominated by the integrated utilitiesˆ The market rules were pretty one-sided." But in the late 90s, as New England states began to enact deregulation legislation, the Federal Energy Regulatory Commission decided that NEPOOL needed to be reorganized, in part to broaden access to the rule-making process.
Sipe then represented, and continues to represent, the Industrial Energy Consumer Group, a consortium of large power users in Maine, who naturally had an interest in gaining a voice at NEPOOL. With deregulation, Sipe explains, state public utilities commissions gave up control over power generation, which generally makes up about 70% of the cost of electricity, while retaining their ability to regulate prices for transmission and distribution, which account for the other 30%. The change meant that if power users wanted to have an impact on rules and rates, the PUC was no longer the most effective place to go. So, says Sipe, the IECG "shifted its emphasis to do more at the federal and regional level ˆ that's where the rubber meets the road."
In 1998, the IECG became NEPOOL's first consumer member, and Sipe was its representative on the board. Today, Sipe says, NEPOOL's "end-user" sector ˆ one of its five sectors, the others being generation, transmission, supplier and publicly owned entity (municipal power plants) ˆ has about 25 members, including individual companies and state public advocates. And, for the first time, one of those end users ˆ the IECG, with Sipe as its representative ˆ has been elected to a yearlong term as chair of the agency. "We decided it was probably time for a consumer to be chair." Sipe says. "So we threw a hat in the ring for real."
Though Sipe, 46, says the position of chair carries no benefits other than the opportunity to run meetings and review NEPOOL filings, he squeezed in an interview for this story prior to a quick trip to Washington to meet a newly appointed FERC commissioner on behalf of NEPOOL. In conversation, Sipe's background as a liberal arts major ˆ he graduated from Central Washington State University with a degree in philosophy and English ˆ is evident. When discussing, for example, the lack of motivation most businesses have to get involved with NEPOOL, he brings up such concepts as enlightened self-interest and the tragedy of the commons.
"I wouldn't encourage a single business to say, 'I'm going to champion a single issue,'" Sipe says. He cites as an example Champion International, a Bucksport paper company now owned by International Paper, which single-handedly took on FERC's policies regarding competition among power generators in 1998. "It was life and death for Champion," he says. "But the power situation in the Northeast pretty much is life or death. If you're talking about bringing new production to the Northeast, even a Wal-Mart uses enough power to make a difference where you site it."
"A huge portion of electricity costs is controlled by what happens when rules get made," Sipe says. "Businesses have an opportunity to have their voices heard. The savings could be tremendous."
Sipe should know. A lawyer in Portland-based Preti Flaherty's Augusta office, he's worked in utility law since the late 1980s. For much of his career, he's advocated for business interests related to utility regulation. He's been involved with the New England Power Pool, known as NEPOOL (pronounced "nee-pool"), since the late 1990s. The organization is the rule-making body for the electric industry in New England and, as Sipe tells it, "in the bad old days, it was dominated by the integrated utilitiesˆ The market rules were pretty one-sided." But in the late 90s, as New England states began to enact deregulation legislation, the Federal Energy Regulatory Commission decided that NEPOOL needed to be reorganized, in part to broaden access to the rule-making process.
Sipe then represented, and continues to represent, the Industrial Energy Consumer Group, a consortium of large power users in Maine, who naturally had an interest in gaining a voice at NEPOOL. With deregulation, Sipe explains, state public utilities commissions gave up control over power generation, which generally makes up about 70% of the cost of electricity, while retaining their ability to regulate prices for transmission and distribution, which account for the other 30%. The change meant that if power users wanted to have an impact on rules and rates, the PUC was no longer the most effective place to go. So, says Sipe, the IECG "shifted its emphasis to do more at the federal and regional level ˆ that's where the rubber meets the road."
In 1998, the IECG became NEPOOL's first consumer member, and Sipe was its representative on the board. Today, Sipe says, NEPOOL's "end-user" sector ˆ one of its five sectors, the others being generation, transmission, supplier and publicly owned entity (municipal power plants) ˆ has about 25 members, including individual companies and state public advocates. And, for the first time, one of those end users ˆ the IECG, with Sipe as its representative ˆ has been elected to a yearlong term as chair of the agency. "We decided it was probably time for a consumer to be chair." Sipe says. "So we threw a hat in the ring for real."
Though Sipe, 46, says the position of chair carries no benefits other than the opportunity to run meetings and review NEPOOL filings, he squeezed in an interview for this story prior to a quick trip to Washington to meet a newly appointed FERC commissioner on behalf of NEPOOL. In conversation, Sipe's background as a liberal arts major ˆ he graduated from Central Washington State University with a degree in philosophy and English ˆ is evident. When discussing, for example, the lack of motivation most businesses have to get involved with NEPOOL, he brings up such concepts as enlightened self-interest and the tragedy of the commons.
"I wouldn't encourage a single business to say, 'I'm going to champion a single issue,'" Sipe says. He cites as an example Champion International, a Bucksport paper company now owned by International Paper, which single-handedly took on FERC's policies regarding competition among power generators in 1998. "It was life and death for Champion," he says. "But the power situation in the Northeast pretty much is life or death. If you're talking about bringing new production to the Northeast, even a Wal-Mart uses enough power to make a difference where you site it."
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