A proposal to share the ownership of electric grid operators to create a competitive market for high-voltage power has been hotly debated for years, but recent decisions by regulators in New York and California hint at unresolved differences.
On 16 October, the New York Public Service Commission voted to approve a plan by the National Grid company to change the rules to allow market participants to rent capacity on the grid, a so-called “wholesale trading” mechanism that is mostly prohibited in the United States. Under the new rules, the company will be required to rent capacity from other transmission system operators (TSOs) that it owns or operates on its own system. National Grid will now also rent capacity owned by other independent transmission operators (ITOs) that operate on New York’s local electric grid.
The vote was split three to two, with the two no votes coming from Robert G Hariri and Steven Sanders. Both Ghariri and Sanders are outvoted in other units of the commission, but nonetheless controlled the outcome in the this one. Now state regulators in New York will have to reconcile conflicting views that have been expressed in the past regarding private ownership of both transmission equipment and grid operators. A more pressing issue is whether property rights have been damaged when electricity ownership shifts from the transmission companies that own the infrastructure and the actual electrons to the companies who oversee the wires, flow and distribution of electricity throughout the state.
Still, New York’s decision drew quick and prominent criticism from other states and from The Electric Power Research Institute (EPRI), a Washington DC-based think tank that in its 2017 Annual Electric Power Industry Report found that, in 2015, New York State was “the furthest along in regards to wholesale electricity generation markets as a way to create efficiencies in the distribution system”. But a similar push is now underway across the country. In fact, a comparable industry association, the North American Electric Reliability Corporation (NERC), has been pushing for private companies to take over and control most aspects of electric grid operators for decades. As a private company, Southern Company, the largest operator of generation in the US, and AP1000 Battery manufacturer, Honeywell, a private US company, took over the grid operator in Baton Rouge, Louisiana last year.
You can read more in my book, The Power Struggle, from CMP Press.