Keywords: BETTA, electricity market arrangements, NETA, regional integration, transmission system operators, unbundling, independent system operators, UK, United Kingdom, USA, United States, Germany, supranational electricity transmission, European electricity transmission
Unbundling ownership and control: international experience of independent system operators
As competition has been introduced into electricity markets around the world, a fundamental challenge has been how to govern the vertical relationship between the monopolistic transmission networks and the potentially competitive activities of generation and supply. An innovative solution is to allow the incumbent to retain ownership of its network but to hand over their operation to an Independent Systems Operator (ISO). In principle, this should remove the opportunity for the owner of the transmission network to discriminate against third-party suppliers. It also allows the integration of transmission networks in separate regions and under separate ownership. This paper considers the lessons of the British and US experience of the ISO model. We conclude that if the British model works, it could be applied within Germany, with the regional networks operated by a single ISO. Ultimately, these types of arrangements could also allow supranational electricity transmission markets in Europe.