Unbundling results in a vertically integrated utility being divided into several new companies. For example:
- generating stations may be grouped into multiple new companies (gencos), or sold off individually to new owners;
- the transmission network may be split off into a separate company (transco), and an ISO created. ISOs coordinate flows on transmission lines but do not own or physically maintain the underlying assets. Creation of an ISO is particularly important if at any point the same entity controls both generation and transmission assets, as an ISO prevents self-dealing and maintains “open access”. Open access is a regime whereby all those desiring to use the transmission system are treated in a non-discriminatory manner, with a transparent framework for identifying and contracting for spare transmission capacity using published tariffs;
- a power exchange may be formed, which may or may not be part of the ISO; and
- several new distribution companies may also emerge.
