Wholesale Market and Transmission Operations represent the bridge between supply resources (Generation) and load (end users, aggregated by Load Serving Entities and served through Distribution). For clarity, we divide the Wholesale Markets and Transmission Operations step into several sets of activities: market making and optimization, operational activities, and the physical infrastructure. We focus on Independent System Operators (ISOs) and Regional Transmission Operators (RTOs). U.S. ISOs and RTOs are: New England ISO (ISO-NE), New York ISO (NY ISO), Pennsylvania – New Jersey – Maryland Interconnection (PJM), Midcontinent ISO (MISO), Southwest Power Pool (SPP), Electric Reliability Council of Texas (ERCOT), and California ISO (CAISO).
Map of U.S. Wholesale Electric Power Markets
Source: United States Environmental Protection Agency Website (https://www.epa.gov/greenpower/us-electricity-grid-markets), original data from FERC
Traditionally, regulated vertically integrated utilities owned and operated generation and transmission infrastructure, possibly trading bilaterally with neighboring utilities; ISOs and RTOs represent a comparatively recent development as electricity deregulation has become common across the U.S. Because of the fixed geographic nature of wholesale markets, they do not compete with each other, and under oversight, they operate as profit-neutral entities to ensure that market participants have access to a competitive market for their services. As of 2011, about 60% of the U.S. electric supply was managed by RTOs/ISOs, making the RTO/ISO the dominant design, but the vertically integrated utility model is still widespread as well. There are significant, ongoing changes occurring in market making and transmission operations activities, including: refinements to market optimizations through improved modeling, improved telemetry and state estimation for transmission, and changes to market rules to encourage straightforward participation and mitigate the influences of market power.
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