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Subjects: SVY, ESG

RTO Governance Poses Challenges To Clean-Energy Transition:White Paper

WASHINGTON, Nov. 4, 2021 /PRNewswire/ -- A white paper released today by two prominent energy policy experts finds that governance issues confronting regional transmission organizations could impede the market reform needed for the ongoing transformation of the nation's power system.

The white paper, Who Owns the RTO? Why RTO Governance is an Achilles Heel in the Clean Grid Transition, was co-authored by Tony Clark, a former member of the Federal Energy Regulatory Commission and now senior advisor at Wilkinson Barker & Knauer, and Vincent Duane, a principal at Copper Monarch, LLC, and a former senior vice president with PJM Interconnection.

The nation's electric grid is undergoing major changes as part of the clean energy transition.  This whitepaper builds on their previous writings exploring some of the challenges RTOs will face as the grid changes. It considers whether RTO governance structures will enable them to be successful given the enormity of the task ahead. The paper examines RTO governance in two parts. Part 1 is diagnostic. It analyzes facts and observed outcomes leading to the conclusion that independence is no longer a viable precept of governance and that both member-driven and quasi-governmental RTO models face different, but real challenges to implementing industry transformation. These infirmities are described as a sort of Achilles Heel for the RTOs in the clean grid transition. Part 2, to be released later, will consider possible alternatives to help remedy the situation.

Given what lies in the balance, FERC must step in, the white paper said, and "abandon the pretense of 'independence' as a workable notion of governance."

"FERC should require that any institution providing regional grid operations establish clear ownership and control, then assertively regulate and hold accountable those system operators as they do investor-owned public utilities," Duane said. "FERC should also strengthen the independence of the market monitor," he added.

"FERC should be open to other types of institutions that offer regionally coordinated operations, planning and markets without the nettlesome governance problems currently associated with RTOs," Clark added.

The white paper will be followed in several weeks by Part 2 offering other governance structures providing fixes to the problems facing RTOs. "Short of Congress committing to a radical public ownership of the grid and a public ownership of grid operations, planning and market administration ? a course we do not regard as feasible or desirable ? then it's time to dust off forgotten TRANSCO ideas and variations on that theme," the white paper said.  

From the White Paper

[RTO]structures have always been bureaucratic, but they also dissipate any locus of control, blur ultimate accountability and not surprisingly, often fail to reach consensus, leaving important questions of market design and operational protocol to be resolved by FERC through administrative litigation.

"We claim no magic elixir to cure what ails RTOs, but we will topple, or at least shake vigorously, two pillars of RTO governance to see if in we can identify institutional alternatives to the RTO with different governance models that can respond more effectively and sustainably to the demands of tomorrow's carbon-constrained grid."

Without this consistent tailwind, the sails at PJM and ISO-NE are often empty and these RTOs find themselves sailing in doldrums, relying on a membership rowing in different directions and a struggle among stakeholder interests to grab the tiller. 


W. John Moore



SOURCE Tony Clark and Vincent Duane

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