K. State
Participation in RTO Operations
1. States have
an important role in the process of creating and sustaining an efficient
competitive wholesale market for electricity.
The Commission has already established state-federal RTO panels as a
forum for the Commission and state commissioners to discuss issues related to
RTO development. However, there
currently is not a formal process for state representatives to engage in a
similar dialogue with the independent entity that will operate the electric
grid under Standard Market Design.
Therefore, the Commission is proposing to establish a formal role for
state representatives to participate on an ongoing basis in the decision-making
process of these organizations.
2. We envision
that the Independent Transmission Provider that operates the grid would have a
Regional State Advisory Committee. The
Regional State Advisory Committee should be formed and should have direct
contact with the governing board, in a manner which recognizes its public
interest responsibilities, and be designed to provide the board as well as
market participants and the Commission with a consensus view from states in the
area. The specifics of how this
advisory committee would be formed and operate would be decided on a regional
basis. This coordinated oversight will
ensure fulfillment of federal public interest responsibilities in a manner that
includes the views of states throughout the region. In this regard, we also encourage the participation of Canadian
provincial authorities in this process.
3. We take note
of the recent report by the National Governors’ Association entitled
"Interstate Strategies for Transmission Planning," which recommends
establishing "Multi-State Entities" to facilitate state coordination
on transmission planning, certification, and siting at a regional level.239
The report recognizes the critical role states currently play in siting
as well as the need to address regional needs.
The institution we propose here appears complementary to the National
Governors Association's recommendation.
In fact, it may be useful to have a single Regional State Advisory
Committee rather than separate committees for siting and other issues. We seek comment on whether there should be a
single Regional State Advisory Committee, or separate committees for siting and
other issues. We also seek comment on
how the state representatives should be selected (e.g., whether the
governor should select them or some other process should be used).
4. The Regional
State Advisory Committee may work with the regional transmission organization
to seek regional solutions to issues that may fall under federal, state, or
shared jurisdiction, which may include but are not limited to:
a. Resource adequacy standards;
b. Transmission
planning, expansion;
c. Rate design and revenue requirements;
d. Market power and market monitoring;
e. Demand response and load management;
f. Distributed generation and
interconnection policies;
g. Energy efficiency and environmental
issues;
h. RTO management and budget review.
Further duties may evolve with the
development and operation of the regional councils.
As discussed, the Commission is proposing to require that the independent entity that operates the markets under Standard Market Design will have a Market Monitoring Unit (MMU). The MMU will be required to report directly to the Commission and the independent governing board of the Independent Transmission Provider. The MMU should also provide its reports directly to the Regional State Advisory Committee. Finally, because of the regional nature of these organizations, there are many new issues involving rate design and revenue requirements. We believe that the Regional State Advisory Committees can bring a valuable regional perspective to these issues and should play a role in deciding these issues in partnership with the Commission. Once the advisory committees are established, we intend to work with them to establish protocols for deciding these regional rate issues. Additionally, the Independent Transmission Provider will be required to develop regional plans for transmission planning and expansion. We believe this is also an area where the Regional State Advisory Committee can bring a valuable regional perspective and should be consulted in developing these regional plans.