Abstract
We investigate the impact of FERC’s policy to create Independent System Operators (ISOs) that independently manage regional electricity transmission resources and institute regional electricity exchange markets. Our analysis examines how the formation of the PJM ISO affected inter-regional electricity trading costs during the period from March 1997 to June 2002. We also examine how ISO formation affected the likelihood of encountering “congestion” in trading electricity between PJM and adjoining regions (particularly the New York ISO and the more loosely organized East Central Area of Reliability (ECAR)). In addition, our analysis estimates the marginal economic value of increased inter-regional transfer capability.
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Kleit, A.N., Reitzes, J.D. The effectiveness of FERC’s transmission policy: is transmission used efficiently and when is it scarce?. J Regul Econ 34, 1–26 (2008). https://doi.org/10.1007/s11149-008-9056-1
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DOI: https://doi.org/10.1007/s11149-008-9056-1