ISO structure
ISOs: an independent system operator has responsibility for managing use of the grid and coordinating the spot market, but does not own the transmission network. An ISO can also be structured to allow for separate operation of a power exchange.
Under an ISO structure, certain responsibilities are performed by the ISO, while others remain with the transmission owners; as such, it may be appropriate to identify respective ISO functions and transmission owner functions.
Transco structure
Transcos: an independent company that combines ownership of the transmission network and responsibility for system operations; may be a for-profit or not-for-profit entity.
Under a transco structure, the transmission owner takes over all of the responsibilities. As such, size and independence play a crucial role.
First, transmission owners need to be of a significant size – a small transco may not have sufficient system information gathering and control capability to ensure reliability.
Second, with regards to independence, one of the principal requirements of an ISO is to be independent and to allow stakeholders to participate in governance. Transcos can be independent affiliates, however, open governance may need to be demonstrated to ensure that stakeholders’ interests are considered, and shareholders’ interests do not always prevail.
