Monday, March 18, 2019

OPINION: Why RTO Transparency Matters

By Rich Heidorn Jr.

It was about a year ago that RTO Insider began expanding its coverage beyond PJM to the other ISOs and RTOs in the Eastern Interconnection. We now have reporters based in PJM, SPP, MISO and New England (covering New York and ISO-NE) as well as Washington. And we’re planning to continue our expansion by initiating regular coverage of ERCOT and CAISO.

With the National Association of Regulatory Utility Commissioners holding its annual meeting this week, we thought it would be a good time to offer some perspective on our experience covering the grid operators.

The idea for RTO Insider’s focus on stakeholder meetings came several years ago, when I attended a PJM Markets and Reliability Committee meeting in Wilmington, Del., while conducting a compliance audit of the RTO for FERC’s Office of Enforcement. With dozens of stakeholders arrayed in two concentric U-shaped sets of tables equipped with microphones, the meeting room resembled the United Nations.

The stakes aren’t as large of course — only 21% of U.S. GDP is produced in the 13 states PJM serves.

pjm

(Click to zoom.)

RTOs’ Hybrid Role

Like other RTOs and ISOs, PJM occupies a unique, hybrid role — not a government, but not a wholly private organization either. (See sidebar, RTOs: ‘A Form Between Government and Business.’)

RTOs make decisions worth billions of dollars, decisions that have a direct impact on the electric bills of millions of ratepayers and an indirect effect on a region’s economy.

But few who are affected by these decisions can afford to send a representative to the hundreds of meetings PJM and other RTOs hold. The mission of RTO Insider is to provide a fair, accurate account of the stakeholder debates to help those outside the room monitor issues that matter to them.

I’m certain more than a few PJM stakeholders were apprehensive when we started attending stakeholder meetings in early 2013. But — since settling a little disagreement with PJM over our publication’s original name — we have had good relations with both PJM and its stakeholders.

The relationship has been aided by the trust that resulted from PJM’s media participation rules, which require us to share stakeholders’ quotes with them prior to publication to ensure accuracy. At all but the two PJM senior committees, stakeholders also have the right to refuse permission to quote them by name or company affiliation (Section 4.5 of Manual 34).

The rules gave me my own apprehensions. But in practice, very few stakeholders invoke the quote veto. Most appreciate having their views communicated. It has also helped us limit factual errors and misunderstandings from lack of context.

In fact, we have voluntarily adopted the “quote check” as an RTO Insider Code of Conduct in MISO, SPP and NYISO, and we will do the same when we expand to CAISO and ERCOT.

New England an Outlier

Why haven’t we done so in ISO-NE? It’s not because we don’t like New England. My daughter is in law school in Boston, so I’m always looking for reasons to go there.

It’s because ISO-NE and the New England Power Pool (NEPOOL) — alone among all the grid operators in the U.S. — don’t allow the press or the public to attend meetings. (See sidebar, ISO-NE and NEPOOL on Transparency.)

ISO-NE is a FERC-approved creation of NEPOOL, which began central dispatch of generation in the region in 1971. ISO-NE, created in 1997, refers to NEPOOL as “an advisory body” to the RTO.

“NEPOOL is a private organization and its meetings (including the Markets Committee, Transmission Committee and Reliability Committee) are private,” said ISO-NE spokeswoman Marcia Blomberg.

NEPOOL Secretary David T. Doot, an attorney with Day and Pitney, told RTO Insider that while there are no NEPOOL bylaws or other documents that prohibit the press, “it has been the recognized practice in the pool for the almost 30 years I have been representing NEPOOL.”

How can this be? FERC decided in Order 2000 to set only “minimum characteristics and functions” for RTOs but to allow RTOs to vary in their rules and governance structures.

We respect ISO-NE and believe it runs a first-rate operation. No RTO has a better communications department or website. NEPOOL posts unusually detailed minutes of its meetings, which are publicly available.

But these are no substitute for true transparency — the kind that can only come by allowing public and press access to stakeholder discussions. ISO-NE is as essential to its region as every other RTO, and its legitimacy depends on public trust.

We believe that ISO-NE’s fears of press coverage are unfounded, and our experience in PJM is proof. PJM’s rules were the result of a compromise between those who stressed the importance of transparency and those who feared the presence of the press would have a “chilling effect” on stakeholder discussions. Anyone who has read a single issue of RTO Insider can tell that our presence has scarcely affected the willingness of stakeholders to vigorously argue their case. This transparency also serves to undermine the claims of some critics that PJM is a shadowy “cabal” into which consumers have no input.

Is there some self-interest in our crusade for transparency? No doubt. We are in the transparency business and make no apologies about it.

The stakeholders in the regions we cover have repeatedly expressed their appreciation for RTO Insider’s commitment to accuracy and fairness. In fact, our business model requires it. Our subscribers include state regulators, consumer advocates, environmental groups and industrial consumers as well as transmission owners and independent power producers. None would subscribe if they didn’t believe us to be both balanced in our coverage and accurate on the details. (That is not to say we always get it right, as evidenced by the two corrections in this week’s newsletter.)

ISO-NE and NEPOOL aren’t the only organizations who could improve their transparency.

At a FERC technical conference last month on MISO’s capacity market, Tyson Slocum, director of the energy program at consumer group Public Citizen, complained that attending stakeholder meetings by phone was an inadequate way to participate because speakers fail to identify themselves.

“There is no transcript made available of these meetings at any time. As a result, there is very little public record about the details of what is driving decisions within this process,” he said. “It is essential that as a part of any capacity market reform that you look at stakeholder process reform because you are entrusting a private organization to represent all shareholders that are affected by policy.”

We’d also like to see NYISO change its rule prohibiting reporters from covering meetings except in person. (While we prefer to cover meetings in person, it is not always possible.) We’d also like to see PJM’s Board of Managers meet in public, as MISO’s and SPP’s do to no ill effect. And we’d like to see all restrictions on audio recordings eliminated. (Having a recording only helps us ensure accuracy.)

That said, ISO-NE/NEPOOL is the outlier among the RTOs and ISOs in the U.S. We take no pleasure in singling them out and hope we won’t have to report a similar disparity a year from now.

So to those within ISO-NE and NEPOOL who are opposed to opening your meetings, we say, let us in. The water’s fine.

2 Comments

  1. […] is as essential to its region as every other RTO, and its legitimacy depends on public trust,” RTO Insider wrote in an accompanying editorial then. Jack Betkoski III, Connecticut Public Utilities Regulator and the president of the National […]

  2. […] is as essential to its region as every other RTO, and its legitimacy depends on public trust,” RTO Insider wrote in an accompanying editorial then. Jack Betkoski III, Connecticut Public Utilities Regulator and the president of the National […]

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