APPA calls ISO RTO market report inadequate

Washington, D.C., December 13, 2010 — The American Public Power Association responded to the ISO/RTO Council’s December 7 report on ISO/RTO market performance metrics by pointing out that the report continues to tout the benefits of RTO/ISO run electricity markets without the essential evidence to back it up.

“This report is yet another attempt by the RTOs to trumpet the benefits of RTO-run markets while providing no new data to back up their claims,” said Mark Crisson, president and CEO of APPA.

This report arrived over two years after the Government Accountability Office first recommended the development of RTO performance metrics in a September 2008 report.

The GAO’s recommendation was based on its finding that: “There is little agreement about whether restructuring and RTOs have been good for consumers, how they have affected electricity prices, and whether they have produced the benefits FERC envisioned.”

Further, the GAO concluded that “FERC has not conducted an empirical analysis of whether RTOs achieved the benefits expected of them or developed a comprehensive set of publicly available, standardized measures to help evaluate such performance.” 

The RTOs provided data in three categories of metrics that had been issued by FERC last month: reliability, markets and organizational effectiveness. The markets metrics are the focus of APPA’s response because the question of whether RTOs provide net benefits to consumers was central to the GAO’s findings and still remains the crucial, unanswered question.

Unfortunately, almost all of the markets metrics presented in the report already exist in market monitor reports and in other public documents, and were therefore readily available when the GAO reached its original conclusions.

“Although the metrics issued by FERC are themselves inadequate, the RTO Council’s report has further eroded the process as it strays far from the GAO findings and recommendations. Instead of providing useful insight and new data, the report is simply another forum for the RTOs to assert unsupported claims about the benefits of the RTO-operated electricity markets,” concluded Crisson.

The ISO/RTO Council begins the 350-page report with a simple assertion of the many achievements of RTOs, a number of which are unrelated to or unsubstantiated by the actual data presented in the rest of the report. Moreover, several RTOs include in their sections a restatement of previously issued claims of numerical cost savings of RTOs without providing the data behind the estimates.

FERC has continued to accept without question the assertion that the RTO-operated markets are benefitting consumers, without providing any data to support this conclusion. The RTO metrics report does little to change this dearth of useful market data. APPA continues to request that greater data transparency be implemented in the RTO markets to allow an accurate determination to be made of whether these markets are producing the claimed benefits.

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