Separating transmission from generation: What`s required and why

Journal Article · Sat Mar 01 04:00:00 EST 1997 · Electricity Journal

DOI:https://doi.org/10.1016/S1040-6190(97)80354-5· OSTI ID:518446

Della Valle, A P

State and federal regulators and utilities themselves are not yet of one mind on exactly what kind of separation should be required between owners of generation and their transmission facilities. There is a general consensus that open and equal access to the transmission system by buyers and sellers is an essential requirement for the development of a competitive electricity market. There is also a consensus that control of the transmission system by owners of generation assets provides a serious impediment to the development of such a market. The concern is that owners of generation assets may be able to influence generation prices by determining the way the transmission system is used, operated, maintained or expanded. Most parties involved in the restructuring process agree with the basic premise that there is a need to separate or `unbundle` transmission from generation assets. However, not all agree on the type of separation that is required. In the US, actual divestiture has not yet been required in any jurisdiction. Instead, any problems stemming from the joint ownership of transmission and generation assets have, to date, been dealt with through `functional` or `operational` unbundling. The Federal Energy Regulatory Commission has found, at least for now, that functional unbundling of utilities` generation and transmission assets is sufficient to ensure open, non-discriminatory access to the transmission system. On the other hand, the California Public Utilities Commission has opted for operational unbundling through the formation of an Independent System Operator (ISO) which has the operational control of the transmission system. Critics of functional unbundling say that it requires ongoing regulatory oversight in terms of affiliate transactions, pricing etc. Critics of operational unbundling argue that current ISO proposals are inadequate with regard to the level of independence of the ISO and the scope of the functions given to it.

• OSTI ID: 518446
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 2 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
BUSINESS
COMPETITION
DEREGULATION
ELECTRIC POWER INDUSTRY
POWER GENERATION
POWER TRANSMISSION