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Title: Toward More Comprehensive Assessments of FERC Electricity Restructuring Policies: A Review of Recent Benefit-Cost Studies of RTOs

Abstract

Definitive assessment of Federal Energy Regulatory Commission policies on regional transmission organizations is not currently possible because of uncertainties in the data and methods used in recent benefit-cost studies as well as lack of investigation of key impacts of the formation of RTOs. (author)

Authors:
; ;
Publication Date:
OSTI Identifier:
20829606
Resource Type:
Journal Article
Resource Relation:
Journal Name: Electricity Journal; Journal Volume: 19; Journal Issue: 10; Other Information: Elsevier Ltd. All rights reserved
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY AND ECONOMY; US FERC; GOVERNMENT POLICIES; POWER TRANSMISSION; COST BENEFIT ANALYSIS; ELECTRIC POWER INDUSTRY; ORGANIZATIONAL MODELS

Citation Formats

Eto, Joseph H., Hale, Douglas R., and Lesieutre, Bernard C. Toward More Comprehensive Assessments of FERC Electricity Restructuring Policies: A Review of Recent Benefit-Cost Studies of RTOs. United States: N. p., 2006. Web. doi:10.1016/J.TEJ.2006.11.004.
Eto, Joseph H., Hale, Douglas R., & Lesieutre, Bernard C. Toward More Comprehensive Assessments of FERC Electricity Restructuring Policies: A Review of Recent Benefit-Cost Studies of RTOs. United States. doi:10.1016/J.TEJ.2006.11.004.
Eto, Joseph H., Hale, Douglas R., and Lesieutre, Bernard C. Fri . "Toward More Comprehensive Assessments of FERC Electricity Restructuring Policies: A Review of Recent Benefit-Cost Studies of RTOs". United States. doi:10.1016/J.TEJ.2006.11.004.
@article{osti_20829606,
title = {Toward More Comprehensive Assessments of FERC Electricity Restructuring Policies: A Review of Recent Benefit-Cost Studies of RTOs},
author = {Eto, Joseph H. and Hale, Douglas R. and Lesieutre, Bernard C.},
abstractNote = {Definitive assessment of Federal Energy Regulatory Commission policies on regional transmission organizations is not currently possible because of uncertainties in the data and methods used in recent benefit-cost studies as well as lack of investigation of key impacts of the formation of RTOs. (author)},
doi = {10.1016/J.TEJ.2006.11.004},
journal = {Electricity Journal},
number = 10,
volume = 19,
place = {United States},
year = {Fri Dec 15 00:00:00 EST 2006},
month = {Fri Dec 15 00:00:00 EST 2006}
}
  • Definitive assessment of Federal Energy Regulatory Commission policies on regional transmission organizations is not currently possible because of uncertainties in the data and methods used in recent benefit-cost studies as well as lack of investigation of key impacts of the formation of RTOs.
  • During the past three years, government and private organizations have issued more than a dozen studies of the benefits and costs of Regional Transmission Organizations (RTOs). Most of these studies have focused on benefits that can be readily estimated using traditional production-cost simulation techniques, which compare the cost of centralized dispatch under an RTO to dispatch in the absence of an RTO, and on costs associated with RTO start-up and operation. Taken as a whole, it is difficult to draw definitive conclusions from these studies because they have not examined potentially much larger benefits (and costs) resulting from the impactsmore » of RTOs on reliability management, generation and transmission investment and operation, and wholesale electricity market operation. This report: (1) Describes the history of benefit-cost analysis of FERC electricity restructuring policies; (2)Reviews current practice by analyzing 11 RTO benefit-cost studies that were published between 2002 and 2004 and makes recommendations to improve the documentation of data and methods and the presentation of findings in future studies that focus primarily on estimating short-run economic impacts; and (3) Reviews important impacts of FERC policies that have been overlooked or incompletely treated by recent RTO benefit-cost studies and the challenges to crafting more comprehensive assessments of these impacts based on actual performance, including impacts on reliability management, generation and transmission investment and operation, and wholesale electricity market operation.« less
  • The Federal Energy Regulatory Commission (FERC) has had little trouble breaking with tradition to promote open access to transmission, but has been loathe to change its traditional transmission pricing policy. Essentially, the FERC has been promoting competition in transmission, while steadfastly adhering to cost-based pricing. Like oil and water, the two do not mix. The FERC finally seems to have recognized this and has moved toward opportunity-cost pricing for transmission services in its rehearing order for the merger between Northeast Utilities and the Public Service Company of New Hampshire.
  • An empirical review suggests that progress has been made in bringing competition into the inherently complex and challenging electricity market, generating substantial efficiency gains. But the large disconnect between the wholesale and retail markets indicates that much effort is needed to allow consumers to optimally reap those gains. (author)
  • Despite their design differences, both the California and the Pennsylvania-New Jersey-Maryland (PJM) markets provide explicit roles for competition in the scheduling functions while allowing the independent system operator (ISO) to manage the spot market. Experience has shown that both can work. This article discusses the California and PJM approaches in an attempt to shed light on the controversy over the ISO`s role in pre-dispatch phases of the market. Section 1 describes the California market and Section 2 briefly review PJM. Section 3 outlines the costs and benefits associated with limiting the ISO`s role in the scheduling phases of the market.more » Section 4 summarizes recent experience in California and PJM and offers some conclusions.« less