No one has yet explained why the electric industry needs independent system operators to manage the transmission grid and a private institution to do essentially the same thing.
That question remains unanswered even now that the North American Electric Reliability Council has released its draft legislation showing how it would recreate itself as NAERO, a self-regulating electric reliability organization insulated from antitrust scrutiny by governmental oversight.
"Reliability does not exist in a vacuum," noted P.R.H. Landrieu, v.p. of electric transmission for Public Service Electric & Gas Co., in comments filed August 17. "The best means of ensuring reliability, and the structure and process of a NAERO, is dependent ¼ on a number of outstanding issues. For example whether ISOs, transcos, gridcos or regional planning entities will be authorized or mandatory.
"It is not appropriate," adds Landrieu, "to engage in advocating piecemeal or patchwork legislation. ¼ If a stand-alone bill is introduced, an intense lobbying effort, including efforts to broaden the scope of the bill to include other issues, is sure to result."
Several years back I heard a comment I liked from Charles Stalon, an alumnus of both the Illinois Commerce Commission and the Federal Energy Regulatory Commission. He noted that utility competition implies a flip-flop in the role of government. Under the old scheme, said Stalon, you had heavy regulation of prices coupled with laissez faire oversight for reliability. NERC called it "peer pressure." Under competition, however, it's just the opposite: laissez faire prices with intensely regulated reliability.