FERC Policy on Independent System Operators: Supplemental Comments

The Commission raised many important questions for consideration in this inquiry. Presumably the extensive and difficult issues cannot be disposed of within the constraints of a two day public conference, even accompanied by a few pages of comments. Hence, my approach is to emphasize the conference as neither the beginning nor the end of the conversation, but as a major milestone in the effort to move forward with the development of open access and competitive electricity markets. Relatively few of the Commission’s explicit or implied questions lend themselves to a single answer. Much has been learned in the development of open access and the design of new market institutions, and tradeoffs among various objectives are, to a degree, inevitable. However, the realities of the electricity system impose certain constraints and consistency requirements that serve to narrow the choices that the Commission can or should make.

Here I respond to the request for supplemental comments addressing the Commission’s questions about transmission pricing and other issues discussed at the two day session of April 15-16, 1998.