Full Title: An RTO for the West: Opportunities and Options
Author(s): Michael Giberson
Publisher(s): R Street
Publication Date: September 10, 2024
Full Text: Download Resource
Description (excerpt):
Over the next few years, many current and prospective political developments have the potential to impact the cost, reliability, and environmental profile of electric power service in the western United States. The formation of a regional transmission organization (RTO) represents the most transformative prospective development. Over the next few years, key decisions about the potential RTO will reshape the region’s electricity landscape. This report aims to illuminate current developments in western power markets and outline what western stakeholders can learn from existing RTOs.
RTOs integrate real-time energy markets with electric transmission grid operations, aligning economic motives with the engineering realities of power generation and distribution to create a more efficient and reliable grid. For some proponents of an RTO, the primary benefit is greater reliability. For others, the primary benefit of promoting wholesale electric competition is that it helps set the stage for retail competition, which can translate to lower costs for consumers. Many also see such markets as a means to better integrate renewable energy.
However, the path to an RTO is not without challenges. While their efficiency and reliability benefits are well-documented, RTOs also introduce new costs and complexities for policymakers and industry participants. Concerns about state autonomy over energy policy and the equitable distribution of benefits underscore the debate. This report explains what RTOs do, what benefits they bring, and the challenges that come along with them. In addition, the report dives into several topics central to advancing regional electric power coordination in the West.