IF AN INDEPENDENT SYSTEM OPERATOR OVERSEES THE TRANS-
mission grid, how much independence is too much? Should ISOs cede control over dispatch to scheduling coordinators, or market functions to a power exchange? Addressing some of these questions, a new report released in April by The Progress & Freedom Foundation criticizes a restructured electric industry built on ISOs with restricted authority.
"A highly regulated transmission network, especially one regulated from Washington, has the potential to seriously undermine the gains from introducing competition," said Michael Block, author of the report and professor of law and economics at the University of Arizona.
The report, Deregulating Electricity: Progress in the States,
compares the restructuring methods used by 16 states in advanced stages of restructuring. It analyzes the typical model for restructuring which consists of: (1) a competitive generation sector; (2) a jointly owned, independently operated but highly regulated transmission network; and (3) locally regulated distribution companies that have exclusive service territories.
Block found that the wires component of the emerging model is questionable. In the report, he suggested that Congress develop an alternative to the ISO model devised by the Federal Energy Regulatory Commission. Specifically, he said Congress should enact a bill allowing transmission system owners to define property rights and to operate the grid as a competitively ruled joint venture.
Avoiding a "Bad Idea"