The benefits and future challenges of regional transmission organizations.
If Compaq owned FedEx, would Dell be certain to get the same terms and conditions for overnight delivery as Compaq? Similarly, if a municipal utility wanted to contract with a supplier within the service territory of an incumbent utility that owned the transmission system and generation, how hard would it be to get transmission service to access the power?
With the passage of the Energy Policy Act of 1992, Congress endorsed the idea that competition among generation suppliers is in the public interest. A natural corollary to the notion of competition among suppliers requires that they not control the transportation of generation to a customer.
As a consequence of this understandable circumstance, the Federal Energy Regulatory Commission (FERC) decided to urge independent operation of the grid. Market administration to better facilitate trade was a natural evolution for this independent entity with no economic stake in market results.
Ten years after the initial Notice of Proposed Rulemaking that set in motion the establishment of RTOs, it is hard to dispute that the mature organized markets with independent management of the grid have achieved tangible benefits for all customers. It is important to remind ourselves of these accomplishments. At PJM we believe that the challenges ahead also need to be discussed. But let’s start with the accomplishments.