Overhaul regional grid operators to speed renewables, says energy lawyer

The power industry “is in the early phase of a technological revolution,” but the entities that hold power and influence in regional grid operators are largely “last century’s power players,” said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, in a thread on media platform X.

The Federal Energy Regulatory Commission (FERC), he said, treats each “discriminatory rule” set by regional grid operators as an “isolated incident,” rather than “tracing them all to faulty governance that perpetuates the status quo.”

The result, he said, is that the power industry is slow to connect new renewables projects, build more transmission, and adopt advanced transmission technologies.

Peskoe noted that 25 years ago FERC approved newly-formed grid operators—widely known as RTOs/ISOs—and that FERC has the legal authority to ensure their independence. He recommended that FERC promote “under-represented voices” in RTO/ISO governance, such as state regulators, “who can be a counterweight to entrenched power.” The map below from the Sustainable FERC Project shows the RTO/ISO regions.

Peskoe based his thread on his forthcoming paper titled “Replacing the Utility Transmission Syndicate’s Control,” to be published in the Energy Law Journal.

When RTOs/ISOs were formed, Peskoe says in the paper, their primary purpose was to achieve non-discriminatory transmission service to enable new power plant developers to participate in interstate electricity markets and allow power prices to be set through competition.

But investor-owned utilities “exercise formal authority and exert informal influence” in developing regional market and transmission rules, Peskoe says, and can “stack the rules against new entrants that might threaten their dominant positions and undermine their business models.”

Peskoe says that FERC itself maintains that it has jurisdiction over RTO/ISO governance, and that FERC’s legal framework “demands” regulation of “utility alliances.” FERC should “revive its independent governance agenda,” he says.

Beyond Peskoe’s call for FERC to require RTOs/ISOs to add “under-represented voices” to their boards, he makes technical recommendations to spur reforms with “the independent entity variation,” support independence with a transparency principle, and “revisit” RTO/ISO filing rights, member sectors, and rulemaking processes.

FERC Commissioner Allison Clements recently stated five priorities for FERC and the RTOs/ISOs: implementing advanced transmission technologies; finalizing FERC’s regional transmission system planning rule; facilitating a connect-and-manage interconnection process; interregional transmission connection; and market development in the West and Southeast.

Law professor Shelley Welton has argued for consideration of public control of RTOs/ISOs, to speed interconnection of utility-scale renewables and storage. Peskoe’s thread on X cites Welton’s work and that of other scholars who have proposed reforms to RTO/ISO governance.