The Federal Energy Regulatory Commission (FERC) released a report on Aug. 12 that represents the latest effort to examine the performance and benefits of Regional Transmission Organizations (RTO) and Independent System Operators (ISO).
The initiative arose in response to a 2008 Government Accountability Office (GAO) report recommending that FERC do more to track the performance and benefits of RTO and ISO markets.
The previous report in this initiative, issued in August 2014, established a set of common performance metrics for evaluating the performance of RTOs and ISOs and individual utilities in regions outside of RTOs and ISOs in areas where these entities perform identical functions.
The report presents FERC staff’s review of data relating to performance metrics that measure activities in which RTOs and ISOs and non-RTO and ISO utilities performed identical functions during the 2010-2014 reporting period.
Additionally, the report presents staff’s review of certain metrics data submitted by RTOs and ISOs that are specific to RTO and ISO market and administrative functions.
During 2015, six RTOs and ISOs submitted performance metrics data in a joint report in Docket No. AD14-15-000. Additionally, seven utilities in non-RTO and ISO regions submitted performance metrics data on a voluntary basis.
These performance metrics cover both reliability and system operations activities. Analysis and recommendations included in the report are not binding upon the FERC Commission or staff.
While the intent behind the metrics is to compare areas in which RTOs and ISOs and non-RTOs and ISOs perform identical functions, FERC staff notes that there are significant differences in the scale of operations performed by the largest RTOs and ISOs as compared to non-RTO and ISO respondents with relatively smaller service territories.
For example, PJM’s footprint covers territory in 13 states and the District of Columbia, while Arizona Public Service Co.’s territory covers 11 counties in Arizona.
All RTOs and ISOs reported the construction of transmission projects for reliability purposes between 2010 and 2014, helping to ensure a reliable grid, according to the report.
Most RTOs and ISOs report managing an increasing share of energy from renewable generation and fluctuations in the relative amounts of energy provided by natural gas-fired generation and coal-fired generation. Gas tends to be displacing coal power for electric generation.
Two of the largest RTOs, PJM and the Mid-Continent ISO (MISO), report relatively low administrative charges per megawatt-hour. Administrative costs typically represent a small percentage of the total cost of wholesale power, according to the report, according to the FERC report.