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MISO: Building The Perfect Beast

Seams, holes, and historic precedent challenge the Midwest ISO's evolution.
Fortnightly Magazine - August 2004

stated purpose of working through the issues. But such plans depend largely on how the grandfathered agreements and seams issues get resolved.

"The outcome from the grandfathered contracts will have a significant impact on what we do," Torgerson says. "FTRs are directly related to who has the responsibility for grandfathered contracts and who will be nominating for those rights. They are tied together."

MISO's ultimate goal may not be to achieve a perfect consensus; the best it may be able to achieve is a stable detent. And while MISO and its members will face critical decisions in the coming months, lawmakers now play the biggest role. "With something of this complexity, it is unrealistic to suggest that consensus can be reached on every issue," Meloy says. "There are varied interests in the energy markets for different reasons, but to move forward with the market design, regulators will need to decide what the market will look like in the future."


  1. , U.S.-Canada Power System Outage Task Force, April 2004;
  2. Burr, Michael T. "The Talent Bubble," , February 2004, p.51.
  3. "The Crescent Moon Utilities' Protest, Petition to Intervene, Comments and Request for Hearing," Federal Energy Regulatory Commission , May 2004.
  4. "Order Accepting and Suspending Tariff Sheets, Rejecting Tariff Sheets, Setting Timelines and Establishing Procedures for Certain Grandfathered Contracts," 107 .

RTO Rivalries

Utilities go shopping for deals.

The Midwest ISO (MISO), like all regional transmission organizations (RTOs), is a voluntary organization. The Federal Energy Regulatory Commission (FERC) does not require utilities to join an RTO, except sometimes as part of a market-power mitigation settlement. However, in its April 2003 white paper, FERC indicated that its final rule on RTOs likely would require all transmission utilities with wholesale customers to join an RTO.

In the meantime, joining an RTO is still voluntary, but this brings advantages and drawbacks. For example, by making a commitment to work together on structuring the organization, members become vested in the RTO. In theory, this will result in an RTO that is optimally suited to the needs of the industry it serves. But like any democratic process, RTOs' consensual nature also creates its share of difficulties.

"When you have a voluntary organization, each member is giving something up to join," says Dale Landgren, vice president and chief strategic officer for American Transmission Co. in Pewaukee, Wis. "By joining, companies give up some control of their systems, and they have to weigh that against what they get out of it."

Because RTOs can't force utilities to join, they've encountered difficulties in integrating some major transmission owners into their systems. In MISO's case, this has left some significant gaps in its territory. A few major examples include MidAmerican Energy in Iowa; Commonwealth Edison (ComEd) in Illinois; and American Electric Power (AEP), based in Ohio.

AEP and ComEd have opted to join the PJM system, even though both companies are based within the MISO footprint. MidAmerican Energy thus far has remained on the sidelines, participating in MISO only indirectly through its membership in the Mid-Continent Area Power Pool (MAPP)-one of