John J. Carney has joined Solomon Associates as a power generation consultant. During Carney's 25 years of management experience, he has worked for Florida...
operate the day-ahead energy and ancillary service markets, and more. An ITC could do all this as a logical matter, but it is usually thought unwise to put these dispatch and market functions into a for-profit monopoly that makes most of its money owning, planning, and expanding the grid.
In principle, the RTO and FERC could define, and then monitor the implementation of the ITC's dispatch and pricing protocols in enough detail to assure that the ITC did not manipulate things to its advantage-just as the RTO and FERC could, in principle, define and monitor an ITC-controlled planning process in enough detail to prevent it from being manipulated to the ITC's advantage. In practice, however, such regulatory constraints and meddling would not be very effective. Perhaps more important for ITC proponents, an ITC whose operations were so narrowly defined and so diligently policed by the RTO and regulators would hardly be the kind of customer-focused, profit-driven, and innovative company they have in mind.
Key Benefit 4: Product and Service Innovation
This is an obscure and speculative benefit. It is often said that ITCs will find new products and services to offer their customers, but there are few specific examples of any kind, and none that illustrate ITC innovations within the SMD. TRANSLink's only example is what it calls an "innovative rate design that addresses … cost-shifting issues … ," but that FERC has yet to approve. It may be that ITCs can deliver benefits of this type-after all, a principal advantage of competition is that competitors may come up with something that nobody anticipated in advance-but there is little reason to think these would be significant.
For-profit ITCs can and should improve the efficiency of grid planning and operations by combining smaller grid companies into larger ones, and should make money doing so, if only at an attractive-but-reasonable regulated rate of return. ITCs also should look for transmission solutions to system problems and, like everybody else in a competitive system, try to convince the final decision makers that their solution is the best for the system and its customers. But proposals that ITCs can or should control system operations to maintain reliability or manage congestion or "maximize throughput" are inconsistent with FERC's SMD-unless the ITC does essentially everything and becomes the RTO in all but name.
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