In a letter sent on May 21, Chairman of the Homeland Security and Governmental Affair Committee, Joseph Lieberman (I-CT), and Ranking Member Susan Collins (R-ME) requested the Government Accountability Office (GAO), an independent arm of Congress, to launch an investigation into the costs and operational structures of regional transmission organization (RTOs) and independent system operators (ISOs) to examine if they have brought the intended benefits to consumers as was predicted.
RTOs and ISOs, which were established as a result of FERC Orders 888 and 2000, were supposed to increase efficiency and reduce the cost of wholesale electricity. Sens. Lieberman and Collins questioned whether they are having the desired outcome.
"We are writing now out of concern that ISOs and RTOs might not be living up to their full potential with respect to improving efficiencies and reducing costs, and might not have adequate incentives to minimize costs," the Chairman and Ranking member stated.
"Creating and operating ISOs and RTOs have turned out to be costly," the letter stated. "Hundreds of millions of dollars have been spent on new staff, facilities, software, and other infrastructure" to begin operations, and additional millions are spent every year to operate them. Calling RTOs and ISOs "effective monopolies" within their geographic boundaries, Lieberman and Collins said there are concerns that "the lack of competitive pressure, which otherwise could help constrain ISO and RTO costs, can result in rates that are higher than necessary."
A copy of the Lieberman-Collins letter to GAO has been distributed to NEPPA separately. NEPPA members have been working closely with the two Senate offices to educate them on this important issue and have expressed concerns about the escalating costs associated with market design mechanisms and the RTO governance structure.