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The Effects of RTO Policies on Energy Efficiency Programs

Philip E. Mihlmester and David Kathan, ICF Consulting

Keywords

Abstract

The Federal Energy Regulatory Commission (FERC) has ordered the formation of large Regional Transmission Organizations (RTOs). The RTOs are designed to handle a
variety of functions relative to the electric transmission system, including transmission operations, planning, scheduling, and investment in upgrade and additional transmission capacity. If formed, RTOs will greatly affect how emerging competitive power markets develop in the United States. They will, therefore, have a significant influence on the evolution of energy efficiency programs and markets. This paper examines the background associated with RTO formation and briefly reviews the activities of RTOs. The paper then explores several issues related to the effects of RTOs on energy efficiency programs and markets. These issues include: RTO objectives, market rules, pricing, the use of load profiles, Federal and state regulatory issues, and other factors which will affect energy efficiency under an RTO structure.

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