[BETA] Fortnightly

Don't overlook impacts on power supply reliability, urges a consultant.

.Tx

Messrs. Cicchetti and Long deserve a round of applause for their insightful article, "Transmission Products and Pricing: Hidden Agendas in the ISO/Transco Debate," in the June 15, 1999, issue of Public Utilities Fortnightly.

The authors rightly point out that the difference between the concept of an "independent system operator, or ISO, designed to operate transmission assets still owned by regulated utilities" and the concept of an independent transmission company, or transco, which "combines ownership and operation of the wires under the same roof," goes well beyond the question of ownership. They articulate in some detail the important distinction between the ISOs and transcos in terms of the types of "transmission products" to be offered by each, and their prices. They also recognize that "ISOs come in a variety of sizes and shapes" and that "one size surely does not fit all." Finally, they wisely refrain from any attempt "to resolve which groups in the state-by-state debate have the best facts or the best arguments."

In addition to the distinction between the ISOs and transcos in terms of the types of "transmission products" and their prices, the concepts of ISOs on the one hand and transcos on the other hand also are characterized by different impacts on the reliability of electric bulk power supply in their applicable geographical regions of operation and, indeed, beyond the boundaries of such regions. While the availability of a particular set of "transmission products," and the prices of such products, are - quite naturally - of great importance to the variety of stakeholders in the ISOs vs. transcos debate, the need for the preservation of electric bulk power supply reliability transcends the interests of one or the other group of stakeholders and thus, truly is in the "public" interest.

Paradoxically, the very fact that the benefits of electric bulk power supply reliability do not accrue to just one or the other "special" interest group - but are diffused throughout the society at large - seems to deprive the reliability issue of the kind of determined advocacy that is so visible with regard to the other issues in the ISOs vs. transcos debate, and elsewhere.

As I had an opportunity to point out in this space on an earlier occasion ("Mailbag," Public Utilities Fortnightly, Oct. 1, 1997), economic activity in a competitive environment is driven by an economic reward. There is a possibility of an economic reward in the sale, marketing, brokering and purchase of electric capacity and energy, with the achievement of such reward made possible by the existence of practical means for the quantifying, measuring, costing and pricing of electric capacity and electric energy. The concepts of "kilowatt," "price per kilowatt," "kilowatt-hour" and "cents per kilowatt-hour" all are well-established. Since there are no practical means for quantifying, measuring, costing and pricing of electric bulk power supply reliability, there is no meaningful foundation in place for the creation of an economic reward to the provider of such reliability. As long as there is no economic reward, reliability