GAO Issues Report About RTO Expenses, Benefits

NAW Staff, Wednesday 01 October 2008 - 10:57:43

Stakeholders, organizations and individuals with financial and regulatory interest in the electricity market have expressed concern about the benefits of Regional Transmission Organizations (RTO) and how expenses affect electricity prices.

As a result, the Government Accountability Office (GAO) was asked to review RTO expenses and key investments in property, plant and equipment from 2002 to 2006 (the most current data available); how expenses and decisions that may affect electricity prices are reviewed by RTOs and Federal Energy Regulatory Commission (FERC); and the extent to which there is consensus about RTO benefits.

The GAO found that RTO expenses and investments in property, plant and equipment vary, depending on the size of the RTO and its functions. Expenses for the six RTOs FERC oversees totaled $4.8 billion from 2002 to 2006, and property, plant and equipment investments totaled $1.6 billion as of December 2006. RTOs and FERC rely on stakeholder participation to identify and resolve concerns about RTO expenses and decisions that affect electricity prices, such as decisions about reliability and whether to develop markets for electricity and other services.

The stakeholders GAO spoke with in two RTO regions value the opportunity for input but have concerns about the resources and information required to participate. Moreover, although regular review of RTO budgets could help FERC with its responsibility to ensure RTO rates remain just and reasonable or determine if a new rate proceeding is needed, FERC's review of RTO budgets varies, according to the report.

Many agree that RTOs have improved the management of the transmission grid and improved generator access to it. However, there is no consensus about whether RTO markets provide benefits to consumers or how they have influenced consumer electricity prices.

For more information, visit gao.gov.

SOURCE: Government Accountability Office




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