Electric Co-op Today

The metrics proposed by federal regulators to gauge the market performance of regional transmission organizations and independent transmission system operators fail to effectively address concerns that led to development of these standardized measures, NRECA has asserted.

Development of the performance metrics was recommended in a September 2008 report from the Government Accountability Office. “The Federal Energy Regulatory Commission has not conducted an empirical analysis of RTO performance or developed a comprehensive set of publicly available, standardized measures to evaluate [regional grid groups’] performance,” GAO noted.

While FERC eventually set out to do so, it coordinated the drafting process primarily with the same regional grid groups whose performance was to be assessed.

This led to the development of proposed metrics that fell far short of those requested by GAO, NRECA contended in March 5 comments to FERC [Docket AD10-5].

“No one is better situated than customers and other stakeholders to evaluate whether the goals of keeping costs down while maintaining a high level of service quality are being achieved by RTOs/ISOs,” the association wrote. “It is imperative, therefore, that stakeholders have a major voice in determining which metrics would best measure whether RTOs/ISOs are effective in achieving the goals of keeping costs low and service quality high.”

The regional grid groups’ existing stakeholder processes represent the best way of accomplishing this, NRECA said. “Efficient and competitive markets will develop only if market participants have confidence that the system is administered fairly,” it underscored.

The lack of market confidence stemming from the perception of discrimination, the association cautioned, “has real-world consequences for market participants and consumers.”

But at present, NRECA said, FERC’s proposal is “but a portion of [the] potentially useful metrics that should be considered … in a stakeholder-driven process beyond the instant proceeding.”

“It was a major mistake for FERC to look primarily to the RTOs to develop these proposals,” said Rich Meyer, NRECA senior regulatory counsel. “One would intuitively conclude that they would invariably be self-serving.”

Tags: Federal Energy Regulatory Commission, Independent System Operator, Regional Transmission Organizations