State Participation in Resource Adequacy Decisions in Multistate Regional Transmission Organizations

The fight over which resources power the grid and how much is required has intensified as flattening electricity demand, low natural gas prices, and preferences for non-emitting technologies push less efficient power plants to retire. The focus has been on substantive solutions, and most recently on attempting to “accommodate” state energy policies in the regional electricity markets—with disappointing results to states, consumer advocates, and clean energy businesses. Missing from this debate is process reform. How decision-making power is balanced between state and federal regulators determines whose goals are prioritized—state environmental and economic development policies, or generator revenue sufficiency and investor confidence in the regional electricity markets, among others. This paper looks at how the balance of power between state and federal regulators differs across multistate transmission organizations and concludes that existing mechanisms in one region could be adopted in another to enable meaningful state input. States dissatisfied with federal decision-making, therefore, have a range of options short of re-regulating or leaving the markets.