Practical Law Glossary Item 0-520-9886 (Approx. 3 pages)
Independent System Operator (ISO)
An independent and federally regulated entity that coordinates regional transmission to ensure non-discriminatory access to the electric grid and a reliable electricity system. ISOs were formed following the issuance of FERC Orders Nos. 888 and 889 by the Federal Energy Regulatory Commission (FERC) to encourage utilities to work together to ensure they provided non-discriminatory access to their transmission lines to non-utility owned power plants.
ISOs are not the only transmission operators in the US. There are also regional transmission organizations (RTOs) which perform generally the same functions as ISOs, but RTOs have a jurisdiction over a larger geographic area.
RTOs and ISOs operate in deregulated electricity markets which represent about two-thirds of the US electric grid. The remainder of the grid is managed by vertically integrated utilities that operate their transmission facilities.
There are currently seven RTOs or ISOs in the US:
Pennsylvania New Jersey Maryland Interconnection (PJM). PJM coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
Midcontinent Independent System Operator (formerly, Midwest ISO) (MISO). MISO assures open access to the transmission facilities and cost-effective delivery of electric power across all or parts of 15 states (North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, Illinois, Indiana, Michigan, Arkansas, Louisiana, Montana, Missouri, Kentucky, and Ohio) and one Canadian province.
Electric Reliability Council of Texas (ERCOT). ERCOT manages the majority of the grid in Texas. Unlike the other RTOs/ISOs, ERCOT operates in only one state and as a result is generally exempt from FERC's jurisdiction, including its regulations regarding rates and transmission. The statute that confers regulatory authority to FERC, the Federal Power Act, applies to the transmission and wholesale of electricity in interstate commerce.
California ISO (CAISO). CAISO provides open and non-discriminatory access to the bulk of California's wholesale transmission grid and some parts of Nevada.
New York ISO (NYISO). NYISO operates New York State's high voltage transmission network, administers and monitors the wholesale electricity markets in the state, and plans for the state's energy future. While NYISO operates only NY's grid, it is subject to FERC's regulatory authority because the grid is interconnected with other grids in the region.
Southwest Power Pool (SPP). The SSP manages the transmission grid and ensures reliable supplies of power, adequate transmission infrastructure, and competitive wholesale prices of electricity in all or parts of 14 states (Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, and Wyoming).
ISO New England (ISO-NE). ISO-NE ensures the day-to-day reliable operation of New England's bulk power generation and transmission system, oversees and ensures the fair administration of the region's wholesale electricity markets, and manages comprehensive, regional planning processes.