Unbundling of Transmission: The Operation and Economics of a For-Profit Transmission Company

With the unbundling and the restructuring of the electric power industry worldwide, the transmission component of the system has evolved from merely a means of providing shared reliability and seasonal sharing of resources to becoming the commercial highway. This evolution has allowed a series of institutional models of that highway to develop. Three concepts have emerged under an umbrella of Regional Transmission Organizations: the Independent System Operator (ISO); the Independent Scheduling Administrator (ISA); and the Independent Transmission Company (ITC) or TransCo. This paper provides a comparison of the three concepts. It focuses on the institutional, economic and regulatory aspects of establishing a regional ITC in the context of the United States regulatory environment. The paper also presents a tariff structure that allows the ITC to operate the power system while neither operating nor participating in the energy market.