5.4. ERMUSR 03-20-2007 - Laserfiche WebLink

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.. w'~~ ~~ American Public Power Association FEBRUARY 2007 ~' Regional Transmission Organizations There are currently six operational Regional Transmission Organizations/Independent System Operators (RTOs/ISOs) under the jurisdiction of the Federal Energy Regulatory Commission (FERC): ISO New England (ISO NE); the New York ISO (NY ISO); the PJM Interconnection (PJM); the Midwest ISO (MISO); the California ISO (CAISO); and the Southwest Power Pool (SPP). (The ERCO'T ISO in Texas is not FERC jurisdictional, so it will not he discussed in this fact sheet.) It is doubtful whether additional RTOs will form in the -rest of the country in the foreseeable future. This document will give a brief description of the history of the six RTOs, discuss each RTO, and summarize APPA's position on RTOs. (For a more detailed discussion of RTOs/ISOs and regional electricity markets, please refer to APPA's "Understanding Electricity Markets," available on our website at www.APPAnet.org.) In April 1996, FERC issued its landmark Order Nos. 888 and 889. In Order No. 888, FERC directed the electric utilities under its jurisdiction (primarily investor-owned utilities) to provide open and nondiscrimiriatory access to their transmission lines in order to help bring down the cost of electricity through increased wholesale competition. FERC also encouraged the formation of ISOs, and set out certain functions they should perform. In Order No. 889, FERC required jurisdictional utilities to establish electronic bulletin boards, called "Open Access Same Time Information Systems" (OASIS), to help manage the non-discriminatory flow of electrons across transmission systems. As regional power markets began to develop, one thing quickly became clear: in regions where a few incumbent utilities owned and controlled a large portion of the region's transmission assets, competitive markets were slow to develop. Moreover, new transmission facilities were not being built at the same rate as new generation (and almost all of that generation was non-utility owned and natural gas-fired). Therefore, on December 20, 1999, FERC issued Order 1\`0. 2000, in which FERC encouraged all transmission owners to y .! voltmtarily develop and join RTOs. APPA members at first viewed RTOs with guarded optimism because RTOs had the potential to: provide non-discriminatory access to " " transmission systems; reduce transmission rate pancaking across individual utility systems; and plan for and oversee the construction of new transmission facilities. RTOs were to have independent governance, encompass an appropriate regional size and scope, maintain operational authority over their transmission facilities, and coordinate system reliability. Order No. 2000 required FERGjurisdictional transmission owners to submit an RTO plan by October 15, 2000, and targeted December 15, 2001, as the date by which all RTOs would be operational. But since there was still no obligation to join an RTO under Order No. 2000, RTOs did not form in a number of regions. This led to FERC's subsequent push in 2002 to standardize RTO functions and markets across the nation and to require jurisdictional utilities to participate in them. This FERC initiative, called "Standard Market Design" (or SMD) spawned significant opposition in Congress and further stalled RTO development in www.APPAnet.org continued 13