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Rao Konidena's picture
Independent Consultant Rakon Energy LLC

Rao Konidena found Rakon Energy LLC because Rao is passionate about connecting clients to cost-effective solutions in energy consulting, storage, distributed energy resources, and electricity...

  • Member since 2014
  • 145 items added with 21,429 views
  • Jul 12, 2021 10:44 am GMT
  • 372 views

I cannot entirely agree with the author bashing organized markets. But it is important, in my opinion, to hear both sides of the story. The story here is, one side (the 9 Ex-FERC Commissioners) argues we need more transmission and organized markets and Regional Transmission Organizations (RTOs) are the way to go. The other side argues, perhaps that's the author's point, that there is mixed evidence that organized markets are the medicine for every ailment in the industry, specifically on carbon emissions. Without any carbon regulation, carbon emissions are down at most RTOs due to, in part, more renewable interconnections.

My view is that RTOs must be independent, independent of transmission owner and state regulator influence.

Yes, RTOs must be able to walk and chew gum at the same time. What do I mean by that? RTOs must operate a reliable grid and make room for new technologies that are cost-effective today compared to 15-20 years in their market participation models. They must operate the current market platform while making room for new market platforms. Would a transmission owner shut down an entire neighborhood for an extended period to make way for a new substation? No, the utility transfers power from another feeder until the new substation is up and running.   

I worked at an RTO for 15 years. I know what it feels like to be outside the RTO, and I have experience working inside the RTO. Healthy skepticism on RTOs and RTO employee salaries is perhaps warranted, and I did benefit from RTOs employee benefits. So, let us not throw away organized markets. Market operators provide wholesale energy price transparency, provide a forum for stakeholders to discuss market reforms, and have the mandate to plan for the future grid. We need the rest of the US under organized markets.

Discussions
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Matt Chester's picture
Matt Chester on Jul 12, 2021

RTOs must operate a reliable grid and make room for new technologies that are cost-effective today compared to 15-20 years in their market participation models. They must operate the current market platform while making room for new market platforms. 

In your experience, is this a problem of attitude from within the RTO? Would a leadership change that has such a mentality be able to make these changes, or are there more structural impediments?

Rao Konidena's picture
Rao Konidena on Jul 14, 2021

My view is, we need leaders more comfortable with new and emerging technologies such as energy storage. RTO management came from traditional utilities in most cases. It will take time to make this change.

Richard Brooks's picture
Richard Brooks on Jul 12, 2021

Thanks for sharing your insights, Rao. I also worked for an ISO/RTO for 14 years and have worked with other ISO/RTO's (i.e. NYISO, PJM, SPP, CAISO, ERCOT) on various projects. You raise some excellent points. IMO, some ISO/RTO's are struggling with the "I" in ISO. Some ISO's are taking hard, "dug in", positions on certain market design concepts such as carbon taxes on electricity. I guess it depends on the semantics of "Independent". Does independent mean the ISO takes "suggestions" from market participants and then independently decides on a market design OR does independent mean the ISO acts unilaterally on market designs and the market participants must follow their lead. In other words, do ISO's have a level of independence that would allow them to implement a carbon tax on wholesale electricity, in spite of the opposition from Governors and Regulators on carbon taxes? I doubt it; FERC would no doubt have the final word on this, but as far as I know ISO/RTO's have no authority when it comes to mandating environmental policies/market rules.

Bob Meinetz's picture
Bob Meinetz on Jul 12, 2021

"...as far as I know ISO/RTO's have no authority when it comes to mandating environmental policies/market rules."

That's correct, Richard, and even FERC has no authority to mandate environmental policies/rules (nor should they).

The EPA has the authority to regulate CO2 emissions, but only from individual power plants. Until it has authority to enforce CO2 limits on a statewide basis, reductions will be limited.

We can start by throwing out the trendy notion there is a "market" in electricity that benefits consumers. Power electricity is a natural monopoly, and always will be - a fact of physics, no matter how many resellers and re-resellers get a piece of the pie. With no market incentive to save customers money, improve their service, or reduce emissions, the only solution that would benefit all Americans will involve federal oversight of state public utility commissions to ensure they're serving the public interest.

Re-instate the Public Utility Holding Company Act of 1935, but with two changes:

1) Give DOE oversight over public utility commissions, not individual utilities, and
2) Give EPA the authority to regulate CO2 emissions on a state-wide basis.

This is mostly a problem already solved.

Rao Konidena's picture
Rao Konidena on Jul 14, 2021

Hi Bob

I am struck by your last comment.

I doubt state PUCs would agree to an oversight by DOE, a Federal branch of government.

Also, doesn't EPA already have authority to regulate emissions across states? I am thinking CSAPR. https://www.epa.gov/csapr/cross-state-air-pollution-rule-csapr-fact-sheets

Is your point, EPA does not have the authority to regulate CO2 emissions across states? I think after Clean Power Plan (CPP) rule, this is where it sits under previous administration - https://www.epa.gov/stationary-sources-air-pollution/fact-sheet-carbon-dioxide-emissions-trends

Bob Meinetz's picture
Bob Meinetz on Jul 14, 2021

"Is your point, EPA does not have the authority to regulate CO2 emissions across states? I think after Clean Power Plan (CPP) rule, this is where it sits under previous administration."

Rao, interpretation of the 1970 Clean Air Act has been contentious from the start, but it's generally accepted EPA has the power to enforce pollution standards from individual power plants.

But the lines blur when we consider what it means to regulate CO2 "across states" (CSAPR does not apply to CO2 emissions). For example, some of what California considers carbon reductions have been achieved by importing dirty electricity from other states - in effect, exporting our CO2 emissions. Currently, the EPA does not have the authority to limit state-wide emissions from DC, but it should. It makes no difference to climate whether excessive CO2 is emitted in California or Wyoming.

Rao Konidena's picture
Rao Konidena on Jul 14, 2021

Thanks Bob for both of your replies.

Bob Meinetz's picture
Bob Meinetz on Jul 14, 2021

"I doubt state PUCs would agree to an oversight by DOE, a Federal branch of government."

Many states didn't agree to oversight by the federal Securities and Exchange Commission either when the Public Utility Holding Company Act (PUHCA) came to a vote in 1935.

Fortunately, more did. They continued to agree for seventy years, until Republicans in Congress and and an oil-friendly president repealed PUHCA in 2005. Suddenly, federal enforcement of federal issues (antitrust, air pollution) had become "antiquated". 

Rao Konidena's picture
Rao Konidena on Jul 14, 2021

Good points, Richard.

I brought up ISOs should be independent of transmission owners and state regulators because I was thinking of MISO at the back of my mind. It is reported that MISO Transmission planning is not showing a need for a project in South region, even though North-South has been a source of consternation. I wonder if MISO is taking stakeholder sentiments from South into consideration.

Regarding FERC, yes, it is all FERC Chair driven, isn't it?

Randy Long's picture
Randy Long on Jul 14, 2021

I have been rethinking the liberalized market reforms for the past 20 years or so. It seems to me that ISO/RTO are staffed (for the most part) by ex IOU (and some POU) folks. That's not necessarily bad. But, there are inertial forces that prevent orgs from embracing new processes, technologies, etc. Another point is that the ISO/RTO c-suites aren't really accountable to anyone. That needs to be addressed. In my opinion the ISO/RTO experiment hasn't produced the results that the policy makers' intended. We should take a look at how the ISO/RTO management teams are addressing climate, risk, and unforseen externalities in the market. It's a work in progress, let's strive to make it better.

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