RTOs and the Public Interest

Deck: 

Defining the mission when the consumer plays second-fiddle to the needs of the market.

Fortnightly Magazine - September 2009
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Here’s a morsel to chew on.

Six months back, when ISO New England was mulling over various reforms that FERC had mandated last fall in Order 719 for the nation’s six regional transmission organizations and independent system operators (RTOs and ISOs are interchangeable terms in this column), the ISO refused point blank to include in its mission statement a proposal by stakeholders that it should operate the bulk power system at the “lowest reasonable cost.”

“The reference to just and reasonable rates is inapposite,” the ISO wrote, in its compliance tariff filed with FERC in late April. Such a requirement, the ISO added, was a “misunderstanding of the ISO Tariff and ISO-NE’s role in the region.”

In particular, the ISO begged off any expertise or authority to opine or judge the merits of any market outcome:

“ISO-NE is not a regulator. ISO-NE is thus not in a position to ensure just and reasonable rates; this is the Commission’s role.”

In fact, FERC Order 719 had instructed each RTO to post on its Web site a “mission statement or organizational charter” to pin down its purpose and guiding principles, plus its “commitment to responsiveness to customers and other stakeholders, and ultimately to the consumers who benefit from and pay for electricity services.”

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