FERC's standard market design: the ITC perspective

Abstract

Summary form only given. There has been a vigorous debate regarding how to structure market and transmission organizations. FERC Order 2000 led the way to the creation of Regional Transmission Organizations (RTOs). These organizations were originally envisioned to carry out both the wholesale market functions and the functional control of transmission. The question of whether these organizations should be for-profit or not-for-profit was left open. This issue has been widely discussed with the emergence of for-profit Independent Transmission Companies (ITC). The division of responsibilities between the not-for-profit RTOs and the ITCs has become a hot topic. At stake are the viability of the ITCs and the confidence of market participants in the market. Failure to reach a sensible solution to this issue will result in transmission continuing to experience under investment and low efficiency. It will continue to be treated as a passive asset rather than an active one being optimized in all timescales to serve the market. Similarly, the development of a standard market design (SMD) will raise numerous other issues that will affect the health of this vital sector. In particular, the ability for transmission companies to invest wisely and promptly, to safeguard their assets and staff, and seek adequate remuneration is likely to be at stake.