A regional transmission organization (RTO) in the United States is an organization that is responsible for moving electricity over large interstate areas. Like a transmission system operator (TSO), an RTO coordinates, controls and monitors an electricity transmission grid that is larger with much higher voltages than the typical power company's distribution grid. TSOs in Europe cross state and provincial borders like RTOs.
An Independent System Operator (ISO) is an organization formed at the direction or recommendation of the Federal Energy Regulatory Commission (FERC). In the areas where an ISO is established, it coordinates, controls and monitors the operation of the electrical power system, usually within a single US State, but sometimes encompassing multiple states. RTOs typically perform the same functions as ISOs, but cover a larger geographic area. A more detailed explanation of the differences is available here.
Only electric utilities that are located within the United States fall under FERC authority, but a larger organization called the North American Electric Reliability Corporation (NERC) overlays the entire FERC footprint and also includes a Mexican utility and several Canadian utilities. As such, international reciprocity is commonplace, and rules or recommendations introduced by FERC often are voluntarily accepted by NERC members outside of FERC’s jurisdiction. Therefore, one Canadian Province is a member of a U.S.-based RTO, while two others function as an Electric System Operator (ESO), an organization essentially equal to a U.S.-based ISO.
Some ISOs and RTOs also act as a marketplace in wholesale power, especially since the electricity market deregulation of the late 1990s. Most are set up as nonprofit corporations using governance models developed by FERC.
FERC Orders 888 and 889 defined how Independent Power Producers (IPPs) and power marketers would be allowed fair access to transmission systems, and mandated the implementation of the Open Access Same-Time Information System (OASIS) to facilitate the fair handling of transactions between electric power transmission suppliers and their customers.
Read more about Regional Transmission Organization: History, Purpose, RTOs, See Also
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