Regional Transmission Groups: How Should They be Structured and What Should They do?

Abstract

Electricity transmission raises numerous challenges of combining cooperation and competition in a coherent institutional structure. It is widely recognized that existing forms of cooperative activity are not sufficiently tuned to the rising competitive forces in the wholesale electricity market. These competitive forces motivated the transmission access provisions of the 1992 Energy Policy Act. Sorting out the details of the new access regime could entail costly and extensive litigation. As an alternative to litigation, some form of voluntary negotiated activity among industry participants may be a more efficient approach. Those interested in pursuing such a negotiation framework have focused on a notion known as a regional transmission group (RTG) as a new way of addressing the issues of common interest in electricity transmission in a regime of broader access. While there is widespread perception that new forms of cooperation are desirable, there is much less consensus on the detailed structure that such institutions should take. This chapter examines these questions with particular emphasis on the transmission capacity expansion problem. While this problem would not be the exclusive focus of an RTG, it raises questions that have not been well handled even by reform proposals addressing access issues involving only existing assets.