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A Regional Transmission Organization (RTO) for the Midwest

Most Midwest stakeholders have urged FERC to take action to establish one RTO in the Midwest region. A large, diverse group of customers, consumer advocates and multi-state utility regulators has been working tirelessly to accomplish this. Other stakeholders have also identified this priority, as in AEP's policy statement on RTO's that envisions the creation of a large RTO (ideally to include the entire Eastern Interconnect). This, according to AEP, would provide fair and open access to power markets for all competitors, reliable transmission of power, and expanded size and effectiveness of markets by eliminating layered or pancaked transmission rates. The RTO would coordinate transactions in an independent, non-discriminatory manner and be responsible for the planning, construction and operation of the transmission grid. By assuring non-discriminatory transmission access over a wide region, and by separating the transmission and generation functions, a robust competitive market can be expected to develop where no generation owner could independently control the market. The RTO would be an independent system operator (ISO) if the current transmission owners continue to own the transmission facilities.

Although the two Midwest region RTOs (Midwest ISO and Alliance) reached a settlement on moving forward with the establishment of a single Midwest RTO, and that settlement has been approved by FERC, challenges remain in the implementation of the settlement provisions. All customers' interests will only be served when a single RTO is up and running.

A dynamic, efficient wholesale power market, then, requires:

  • a single, large Regional Transmission Organization (either profit or non-profit) for the Midwest;
  • fair and open access for all competitors, i.e. no preferential treatment and an absence of politics;
  • reliable transmission of power;
  • a coordinated rate structure, i.e. no layered or "pancaked" rates;
  • transactions that are independent of owners' interests;
  • an independent organization that plans, designs and operates the grid to maximize reliability;
  • clear separation between transmission and generation functions so no generation owner can control the market;
  • sensitivity to market imbalances and non-discriminatory proactive and reactive responses.


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