To Pool or Not to Pool? Toward a New System of Governance

Fortnightly Magazine - March 1 1996
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What are the essential characteristics of the system of governance that will be required for a new, North American electric industry with interconnected and interdependent transmission networks and trading areas?

Electric transmission networks are natural monopolies, as are the many independent network

control systems that coordinate the use of generators and loads and preserve system reliability. The organizations and assets necessary for the efficient exploitation of these natural monopolies are not likely to arise through the actions of rival firms.

Today we contemplate how to create organizations and rules that will permit unregulated, profit-maximizing generators in three nations to trade with users and distribution companies across complex transmission networks. Yet there exists no single governmental agency (or coalition of agencies) vested with the regulatory powers necessary to ensure the efficient planning, construction, and operation of transmission networks. Nor has such an agency existed in the past, ever since electric utilities first interconnected their systems across state lines.

The Electric Industry:

A History of Diversity

The absence of any suitable regulatory agency to take over the task of governance for the new electric industry stems from the historical development of individual companies and patterns of ownership.

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