6.6. ERMUSR 01-11-2005 - Laserfiche WebLink

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much more needs to be done. The Commission needs to vie~ti~ RTOs for what they are-regional monopolies that it must vigorously regulate, not regional extensions of the Commission itself. The FYA does not exempt from regulation public utilities simply because they are I~fOs. RTO Governance Must Be Made Accountable To Electric Consumers' Interests Four of the fi.-e current RTOs have independent and, in some cases, sell= perpetuating boards. FERC's reason for requiring independent boards was a good one: to avoid RTO governance structures that could be "captured" by one or a few industry sectors, leading to bias in RTO operations and transmission service provision. But AY PA members' experience with independent RTO boards shows that there is a significant dog-onside as Drell. First, independent RTO boards can lack direct accountabilit}' to the industry participants in the KTO's region and to the electric consumers the RTO ultimately serves. APPA members have seen RTO boards vote to take actions that a eery substantial majority of industry stakeholders in their own regions vehemently opposed. When such events occur repeatedly, there is a loss of confidence in-and "buy in" to- APPA nlenlbe~S have RTO actions b}' industry participants. This can be very damaging ..Sean RTC bOardS Vot@ t0 for the RTO itself in the long run. RTOs will only be able to tak88ct100S that a Very operate effectively iF they are accountable and have the respect SUbStantlal majority.Of `' of all industry participants that must deal with the RTC). "hhat IndUStry~StakeholderS respect has to be gained and maintained through RTO board 10 their OWn re910nS and management accountability. Vehemently Opposed. Second, some independent boards seem to rely to a very significant degree upon RTO management and staff (who can also be inexperienced). 'This can lead to insufficient oversight (in the cost area discussed above, for example). Recent corporate governance scandals in this and other industries point out the need to avoid boards that are too dependent on management and staff, without independent knowledge of what is happening "on the ground," both within their own RTO organization and in the RTO's region. This lack of RTO accountability to customers and stakeholders creates the ~~~idely held view that RTOs have only one dominant stakeholder-.FERC. This perception is damaging to the credibility of both FERC and the respective RTOs. To allay this problem, FERC and the RTOs must take steps to promote an atmosphere of mutual respect and constructive relations between RTOs and the industry participants that must deal Restructuring at the Crossroads: FERC Electric Policy Reconsidered 17