[BETA] Fortnightly

Seams, holes, and historic precedent challenge the Midwest ISO's evolution.

In a single sentence, Bill Smith of the Organization of MISO States (OMS) summarizes prevailing concerns about the new-and-improved Midwest ISO: "When it starts, it has to work."

Smith, who serves as executive director of a group representing state regulators in MISO's sprawling footprint, is referring to MISO's provisional start-up of a new market-based electric transmission grid operation. But as the days count down to the March 1, 2005, launch, many people are thinking about a different date-namely, Aug. 14, 2003, on which a series of events (beginning with a mysterious encroaching tree somewhere in Ohio) led to blackouts from the Midwest to Maine. Before utilities managed to fully restore the grid some 72 hours later, the blackout had cost the American economy as much as $10 billion in lost productivity.

"The Aug. 14 outage was a turning event for MISO," says James P. Torgerson, MISO's president and CEO. "It changed the way we look at reliability."

Since last August, the regional transmission organization (RTO) has strengthened its focus on grid reliability by upgrading its information systems and procedures, and by expanding its staff of operators. It also has taken strides to improve the way it interacts with other RTOs and non-MISO utilities. These steps are intended to address deficiencies that contributed to the blackout, and to demonstrate the RTO's capabilities and readiness to operate the largest wholesale power market in North America.

"One of our biggest challenges is regaining trust and making sure people have confidence that MISO knows what it is doing," Torgerson says. MISO clearly has made progress to that end, but many details must be resolved before key stakeholders will feel comfortable launching the new market. Most stakeholders agree with MISO's goals; many differ about how quickly the RTO realistically can achieve them. Or, in Smith's words, "The mandate to get it right is an absolute. We're not sure we've got it right on paper yet."

Whole Cloth

MISO aspires to create a single, seamless power market across North America's heartland. The goal is to have a system akin to the PJM RTO, in which transmission congestion is managed with market competition, and participants in the market can trade financial transmission rights (FTRs) on a forward basis. At the same time, MISO would assume full responsibility for maintaining the security and reliability of the transmission systems under its purview.

These are not easy tasks, given the fragmented and diverse nature of MISO's footprint, and the fact that the MISO RTO was built from scratch, rather than from an existing entity like PJM or the New York ISO.

"MISO is the only RTO that is trying to be created out of whole cloth," says Dale Landgren, vice president and chief strategic officer for American Transmission Co. in Pewaukee, Wis. "No regional entity is trying to cover the geographic scope that MISO is covering, or to bring together people who have no history of working together on regional issues. By itself, that is daunting."

MISO's geographic footprint covers 15 states,