November 29, 2002—Charles River Associates, (CRA), and GE Power Systems Energy Consulting (GE) have completed their collaboration on a report, “The Benefits and Costs of Regional Transmission Organizations and Standard Market Design in the Southeast,” prepared for and released by the Southeastern Association of Regulatory Utility Commissioners (SEARUC).
SEARUC commissioned CRA and GE to evaluate the benefits, costs, and consumer impacts of establishing three Regional Transmission Organizations (RTOs) within the southeastern United States in conjunction with adopting the Standard Market Design (SMD) for electric power markets proposed by the Federal Energy Regulatory Commission (FERC).
Although, previous studies by other researchers had found substantial benefits accruing from RTO formation in other areas, the CRA/GE study, concluded that the benefits of the RTO/SMD policy led to gains from trade that would only break even with the cost of RTO development and operation for the Southeast as a whole, with two of the RTOs incurring more costs than benefits.
The CRA/GE study found that substantial benefits would accrue to ratepayers from adopting a more efficient transmission pricing policy based on a “beneficiary-pays” principle for certain transmission investments. In addition, while it was determined that there were only modest incremental trade and system operation benefits to be derived from having a single southeastern RTO (rather than three), there were nonetheless substantial savings to be realized in the cost of RTO development and operation.
To obtain a copy of the report, contact CRA.
