The utility of the future? To start with, it shouldn’t have a grid, experts say

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Quick Take:  An independent system operator (ISO) is a neutral party responsible for the management and control of the electric transmission grid in a particular region. In that sense, a better name would be independent transmission system operator (ITSO). Now two of America's top electric-power thought leaders want the concept extended to include independent distribution system operators (ISDOs). Jon Wellinghoff is a San Francisco attorney who was formerly Chairman of the Federal Energy Regulatory Commission. James Tong is VP Strategy at Clean Power Finance. They authored a paper for Public Utilities Fortnightly which says we should remove grid operations from utility oversight. – Jesse Berst

 

Current regulations and regulators, say Wellinghoff and Tong, work to protect utilities against  disruptive change. With that protection in place, utilities have little incentive to embrace innovation and competition.

 

But a  monopoly model can only be justified if it provides a service that CANNOT be delivered cost-effectively through competition. If (thanks to new technologies) businesses can competitively provide such a service, then the model needs to change. That's why Welllinghoff and Tong want to see distribution utilities transfer their grid operations to an independent distribution system operator. "Dissociating grid ownership from grid operations will greatly benefit the public and arguably the utilities, too," they write.

 

The ISDO would be under the jurisdiction of the state's public utility commission. It will be responsible for:

1.     Maintaining the safety and reliability of the distribution system

2.     Providing fair and open access to the distribution grid (and information from it)

3.     Promoting appropriate market mechanisms

4.     Overseeing the optimal deployment and dispatching of distributed energy resources