Regional Transmission Organizations (RTOs): effects on electricity markets, operational reliability and transmission planning

Summary form only given. The restructuring of the electric power industry in response to the Federal Regulatory Commission (FERC) Orders 888, 889 and 2000 has evolved with many major milestones that have resulted in the creation of different kinds of market structures and business practices in various regions of the United States. In its series of July 12, 2001 orders, the FERC directed several mediated processes for the consolidation of RTOs to encompass "natural markets". These orders may have signaled the commission's inclination towards more uniform practices and a systematic process for the coordination of practices among the various RTOs. The orders of July 12, 2001 acknowledge that wholesale power markets will benefit from having fewer seams, and more consistent business models and practices. Seams issues may be characterised by the problems of conducting power transactions between different geographic areas under well-defined rules and tariffs. These involve the coordination of the scheduling practices that govern the flow of energy and energy payments between various control areas and transmission regions, coordination of ancillary service requirements and characterizations that are used for grid management. The resolution of inter-regional seams issues even with fewer RTOs can be a challenging process that may take many years to accomplish.