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NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES

R E S O L U T I O N

Resolution on Independent System Operation

WHEREAS, the electric grid consists of interconnected electric generators, transmission facilities, and distribution facilities;

WHEREAS, the operation of the transmission system affects and is affected by the operation of electrical generators;

WHEREAS, the reliability of the nation's electric supply depends on a high level of coordination among transmission facilities and generation facilities;

WHEREAS, transmission facilities currently exhibit characteristics such as high fixed costs, difficulties in siting, and complex interactions affecting their integrity and available capacity which call for continued regulation for the foreseeable future;

WHEREAS, all of the above characteristics allow transmission operation to materially affect the development, existence and efficiency of a competitive market for delivered electric power and the services it provides;

WHEREAS, Congress and several states are actively considering or implementing legislation which would affect the reliability, price, availability and competitive neutrality of the transmission grid by introducing competition between and among electric generators;

WHEREAS, much of this legislation calls for the creation of new institutional arrangements known generally as "Independent System Operators";

WHEREAS, a variety of Independent System Operators have recently been approved by the Federal Energy Regulatory Commission; and

WHEREAS, there appear to exist numerous potential roles, characteristics, legal structures and other alternatives for Independent System Operators.

THEREFORE, BE IT RESOLVED, that the National Association of State Utility Consumer Advocates calls for all Independent System Operators, as well as any other entities charged with or assuming the operational control of a regional portion of the transmission grid, to meet the following minimum requirements:

All ISOs and related entities should be truly independent from the financial interests of particular generation and transmission owners, marketers and customers and should have plenary authority over the operation of the interconnected transmission system, including the loading and unloading of lines for reliability purposes.

This independence may be influenced by alternative provisions affecting governance and scope of ISO authority, but can only be ensured by appropriate regulatory oversight over all practices, tariffs, rules, requirements and procedures employed or enacted by the ISO or related entity.

Such regulatory oversight should encourage and facilitate effective dispute resolution, but must maintain due process protections, including the right of appeal and of removal to higher legal authority, for all parties affected by the structure, governance or any practice, tariff, rule, requirement or procedure employed or required by the ISO or related entity. Such oversight and due process should also include the addressing of issues related to the independence of the ISO or related entity.

Such regulatory oversight must be provided in a coordinated and balanced way by federal and state regulators.

ISOs must be required by statute or regulatory oversight to meet strict standards of economical operation and investment, minimization of prices to consumers, open and comparable access, competitive neutrality and public accountability.

The costs of the ISO and other related entities must be just and reasonable, and shared by all users in an equitable, non-discriminatory and competitively neutral manner.

There must be a clearly defined and substantial role for consumer advocates and other stakeholders in the governance and/or oversight regarding the ISO or related entity.

Any powers or authority delegated to the ISO to prevent, identify and mitigate the exercise of market power must not preempt the application of antitrust law to illegal anti-competitive acts carried out by transmission owners or other market participants.

All ISOs and related entities must enforce compliance with reliability rules and protocols promulgated by the North American Electric Reliability Council or any duly authorized successor organization(s) by all members, customers, users, and owners of transmission.
BE IT FURTHER RESOLVED, that NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with the terms of this resolution. The Executive Committee shall advise the membership of any proposed action prior to taking action if possible. In any event the Executive Committee shall notify the membership of any action pursuant to this resolution.

Approved by NASUCA:

Submitted by:

Seattle, WA
Place

NASUCA Electricity Committee

June 10, 1998
Date

Larry Frimerman (OH), Chair
Thomas Brocato (TX)
Scott Cauchois (CA)
Barry Cohen (OH)
John P. Cook (IN)
Nancy Vaughn Coombs (SC)
Steve Corneli (MN)
Anne Curtin (NY)
George Dean (MA)
William Fields (MD)
Margaret Force (NC)
Brian Gallagher (DE)
Walker Hendrix (KS)
Jim Hurt (GA)
Bruce Johnson (CT)
Robert Kelter (IL)
Angela Kennedy (DC)
Eugene Koss (CT)
Ryan Kind (MO)
Thomas Nicholson (VA)
Charles Noble (NM)
Gerry Norlander (NY)
Blossom Peretz (NJ)
William Perkins (ME)
Irwin Popowsky (PA)
Fred Schmidt (NV)
Ben Stead (IA)
Kenneth Traum (NH)