The Law of Holes and Energy Market Reform by WBK Partner Ray Gifford looks at the history of the Regional Transmission Organization/Independent System Operator (RTO/ISO) regulatory model and asks whether it is suited to the current ends of energy regulatory policy.

In short, Ray finds that a regulatory model from the 1990s aimed at imposing marginal cost pricing discipline is not suited to accomplish the goals of larger power pools, energy resource transition and transmission buildout. To the contrary, the RTO/ISO regulatory model has failed to maintain the integrity of the price system and its stakeholder processes distort incentives for efficient infrastructure investment. He concludes by encouraging a look at “emergent” market models like SEEM or revisiting the for-profit “Transco” market model.

Read the Law of Holes and Electricity Market Reform white paper here.