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regions of the country that did not. yet. have them (primarily the Pacific Northwest, the South, and the desert Southwest). A Brief Description of the Scope and Function of the Six RTOs: In regions with operating RTOs, market participants buy and sell a variety of electricity products and services in RTO-run markets. Typically, these products and ser-~ices are not actually furnished by the RTO itself; instead they are sold by market participants through market structures that the RTO administers. For example, in RTO regions with centralized markets for electric energy (PJM, NYISO, ISO-NE and MISO [CAISO?]), the RTO operates the day-ahead and real-time markets through which market participants buy and sell spot electric power. The RTO does not own the power plants that generate the power bought and sold in the market. But the RTO develops the rules it uses to administer the markets, decides which generators will run and at what levels, grants (or denies) the transmission services needed for transactions to occur, and runs the billing systems for payments for power. Much of the controversy over RTOs centers on the use of markets to manage transmission line congestion and balance generation output against customer load (demand). Most RTOs manage congestion on their transmission systems (where demand for transmission service in a specific direction exceeds the capacity of the needed lines) by charging a premium to transmission customers using those lines. The premium is based on the difference in spot power prices at the desired point of receipt into the transmission system and the desired point of delivery. This congestion pricing system is known as "locational marginal pricing" (LMP). These RTOs also operate day-ahead and real-time spot power- markets. The prices for power in these markets are set every hour based on the bids that sellers submit to the RTO. The RTO takes all bids in ascending order, and stops with the last incremental bid needed to supply power to buyers in that time irrt.erval. The price all sellers in that time interval receive, however, is based on the last bid the RTO accepted-this is known as a "single clearing price" market. RTO markets with these features are called "Day 2" markets. (The CAISO does not yet use afull-fledged "Day 2" market, but has filed with FERC to implement one. SPP began operating an real-time energy imbalance market on February 1, 2007. ) Beyond these basic similarities, each RTO has individual characteristics: CAISO: Operates only in California, but it is fully FERGjurisdictional. Some public power systems in the state have chosen not to turn over operational control of their transmission facilities to the CAISO, but all public power systems are impacted by the CAISO's spot market prices and provision of transmission ser~zce, due to the web of business relationships among market participants in the state. ISO NE: Operates in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. ISO I~iE proposed to add a new locational generation capacity market (called Locational Installed Capacity or LICAP), which engendered great controversy in the region. However, most parties have now agreed to a settlement which replaces the LICAP proposal with a Forward (:apacity Market (FCM). The Commission has approved the FCM settlement, but some parties, including the state of Maine, continue to oppose it. MISO: Operates in all or parts of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Pennsylvania, South Dakota, Virginia, Wisconsin and Manitoba, Canada. There have been complaints about MISO's high rates, and the investor-owned utilities in Kentucky have requested and obtained FERC permission to withdraw their transmission facilities from MISO's control. `~ www.APPAnet.org continued i