White Paper | Rethinking and Restyling an Old Idea: A New Model of Transco to Plan and Operate a Changing Grid
This is the final in a three-paper series examining how well RTOs can be expected to handle the ongoing grid transformation in this country. In this paper, WBK Sr. Advisor Tony Clark and Former PJM Sr. Vice President Vincent Duane examine the rush of renewables seeking to interconnect to the nation’s RTOs. Geography that is conducive to renewables and states that offer support goes a long way to explain the boom. But an unseen force is also at work. The interplay between the markets RTOs administer with subsidies and out-of-market contracts works to socialize costs of these projects away from their sponsors across all wholesale buyers in RTOs. Without economic forces disciplining entry, the interconnection queue, market design and governance challenges that result should come as no surprise Building on their previous writings, they suggest one path forward is to coordinate interconnection access and realize efficiencies from regional planning and a non-discriminatory centralized dispatch through the private ownership of system operations. Their model is grounded in the transmission owning utility – an entity legally recognized and regulated under the Federal Power Act – and builds from this foundation to reassess whether power pooling, TRANSCO and emerging TRANSCO-type structures might more effectively handle the political, economic and engineering complexities raised by today’s grid transformation.