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A regional transmission organization (RTO) in the United States is an electric power transmission system operator (TSO) that coordinates, controls, and monitors a multi-state electric grid. The transfer of electricity between states is considered interstate commerce, and electric grids spanning multiple states are therefore regulated by the Federal Energy Regulatory Commission (FERC).[1] The voluntary creation of RTOs was initiated by FERC in December 1999.[2] The purpose of the RTO is to promote economic efficiency, reliability, and non-discriminatory practices while reducing government oversight.
An independent system operator (ISO) is similarly an organization formed at the recommendation of 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.
The two are similar, with an RTO being more clearly defined and born out of the concept of electrical grid reliability. The delineation between an ISO and an RTO is subtle to some and quite specific to others, as the similarities in the table below illustrate:
| ISO | RTO |
|---|---|
| "...an organization formed at the direction or recommendation of the [FERC]..." | "...designated by the [FERC] to direct operation of the regional electric transmission grid in its area..." |
| "...a neutral party responsible for the management and control of the electric transmission grid in a state or region..." | "...coordinates, controls and monitors an electricity transmission grid that is larger with much higher voltages than the typical power company's distribution grid..." |
| "...operates an electric-transmission system that it does not own..." | "...coordinates power generation and transmission within an integrated regional market..." |
| "...an independent, Federally regulated entity..." | "...an independent governing body..." |
| "...ensure[s] the safety and reliability of the electric system..." | "...[responsible] for electric transmission grid operations, short-term electric reliability and transmission services within a multi-state region..." |
| "...for the purpose of providing open access to retail and wholesale markets for supply..." | "...serve as the independent operator of the regional electric market..." |
In short, an ISO operates a region's electricity grid, administers the region's wholesale electricity markets, and provides reliability planning for the region's bulk electricity system. Today's RTOs do the same thing with an added component of greater responsibility for the transmission network, as established by the FERC.
- ^ "16 U.S. Code § 824".
- ^ "Docket No. RM99-2-000; Order No. 2000" (PDF). UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION. December 20, 1999. Archived from the original (PDF) on 2016-12-21. Retrieved 2016-11-18.