The Organized Wholesale Market Improvement Paradox

Date01 August 2022
AuthorTom Hassenboehler
by Tom Hassenboehler
Tom Hassenboehler is a Partner at COEFFICIENT.
Regional transmission organizations (RTOs), while
imperfect, are the best method to fac ilitate the deliv-
ery of reliable, aordable, and clean electric power.
However, after more than 20 years, and as the West and
Southeast debate new market congurations, it is time to
take a critical look and improve RTOs to ensure that they
will continue to be a force in the U.S.’s electric system for
the next 20 years. Despite oversight by the Federal Energy
Regulatory Commission (FERC) and a growing judicial
record of precedence in the courts, the U.S. Congress is t he
only place that can “x” RTOs, and the political will must
be developed to do so.
By way of background, I am a late appreciator of what
markets have achieved over the last t wo decades. Despite
having the privilege of participating in some of the big-
gest energy policy debates at the federal level over the last
two decades, up until my second stint at the U.S. House
of Representatives Energy and Commerce Committee, I
could barely tell you what a regional transmission orga-
nization (RTO/ISO) is or does. is knowledge has been
relegated to the FERC experts and electricity practitio-
ners—and always viewed as overly cumbersome, compli-
cated, and problematic. at was my perspective as a fa irly
informed policy professional—so imagine what members
of Congress are like when you try to explain this complex
architecture. However, this wasn’t always the case. As ma ny
know, there was a robust history of congressional interest,
oversight, and legislative development in the late 1990s and
early 2000s. But then, for nearly 20 years at the federal
legislative level, organized ma rkets became relegated to the
congressional sidel ines. Why? Complexit y. Underapprecia-
tion. Imperfection. Inc onsistency throug hout the country,
all of which make it dicult to have a national narrative.
Due to lack of congressional involvement subsequent
to facilitating the creation and debating the standardiza-
tion of RTOs in the 1990s, RTOs have become necessarily
and unnecessarily complex. Why? e electricity system
is evolving in ways that were not considered during their
origination, and they have become the default policy deci-
sionmakers for Congress. In 2015, however, Congress
did take a look at wholesale markets and RTO gover-
nance through a legislative hearing series called “Power-
ing America” that I helped to lead and organiz e. We held
nearly 13 hearings that were completely bipartisan. e
hearings and the development of the witness lists and top-
ics were completely bipartisan. A two-part hea ring that
inspired my future work was called “Consumer Oriented
Perspectives on Improving the Nation’s Organized Mar-
kets.” e hearing was one of the rst to showcase the rise
of the 21st-century electricity customer—and its big-tent
evolution—from consumer advocates, to large industrial
and tech customers, to the active, climate-conscious con-
sumer who wants to secure clean and increasingly local-
ized electrons. ese customers were simply not part of the
equation two decades ago, when RTOs evolved into their
current stance.
Despite time passing, the record from these hear ings has
not evaporated. While many new members of Congress a re
now on the Committee, several members and their sta
remain. ere is now burgeoning interest in building from
these prior hearings and tack ling some of these challenging
but necessary topics again—in particular, organized mar-
ket governa nce and expansion.
Organized ma rkets (both their governance and new for-
mation) have recently become a key topic in states and in
new regions where they don’t exist such as the West and
Southeast, due to the rise of the active electricity customer.
As the electricity industr y evolves, so too does the elec-
tricity customer. No longer content with the traditional
model, today’s electricity customers seek a more active role
in accelerating the energy transition. New electricity cus-
tomers expect options that t their needs and their mission.
Wholesale markets are again becoming intert wined in the
policy narrative, because customers (both large and smal l)
are becoming more engaged and seek ing options.
Prof. Shelley Welton’s article¹ correctly points out aws
in the current approach and challenges the reader to think
comprehensively about ways to improve upon the existing
structures. is “rethink” comes at a critical a nd oppor-
tune time as new cong urations of RTOs are being consid-
1. Shelley Welton, Rethinking Grid Governance for the Climate Change Era, 109
C. L. R. 209, 257 (2021).
Editors’ Note: Tom Hassenboehler’s Comment is based on
his remarks at the 2021-2022 Environmental Law and Pol-
icy Annual Review conference, available at https://www.
Copyright © 2022 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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