The Federal Energy Regulatory Commission (FERC) on January 24 held a technical conference on independent system operators (ISOs) and power pools, as part of its electric transmission open-access Notice of Proposed Rulemaking (NOPR). The FERC's question: Is it necessary in a competitive market for utilities to transfer control over transmission facilities to ISOs, and if so, what form should ISOs take? (18 CFR Part 35, Docket Nos. RM95-8-000 and RM94-7-001). Although participants agreed that an ISO must be independent, opinions differed on how to ensure that independence.
Appropriately, California Public Utilities Commission (CPUC) chairman Wm. Daniel Fessler spoke first. Referring to the CPUC's recent restructuring order, Fessler predicted the benefits of an ISO in terms of California electric users:
s Permanent and functional resolution of transmission access disputes between the transmission-owning utilities and those dependent on access
s Lasting efficiency gain resulting in cost savings due to combining the now-distinct control functions of many entities
s Operational efficiency inherent in a transmission network that has no economic interest other than fostering open access and supply
s Consistent pricing for common network facilities that prevents cost shifting and supports the competitive market.
Fessler pointed out that the CPUC's restructuring order separates the ISO from the Power Exchange, and gives the task of facilitating the spot market to the Power Exchange. Transmission assets would remain the property of the participating owners, but control would be ceded to the ISO.