LEARN / GLOSSARY
Regional transmission organization
An entity that operates the transmission system and runs wholesale electricity markets across a multi-state footprint. Seven exist in the contiguous United States and together serve roughly two-thirds of national load.
Definition
Regional transmission organisations and independent system operators emerged from two Federal Energy Regulatory Commission orders: Order No. 888 in 1996, which opened transmission access and established the foundation for organised wholesale markets, and Order No. 2000 in 1999, which encouraged utilities to join regional transmission organisations. The distinction between ISO and RTO is largely administrative, with RTOs meeting additional FERC requirements on transmission access and governance.
Why the dictionary version is insufficient
An RTO is commonly described as operating the grid, which conflates it with the balancing authority function. Market operation and transmission planning across a footprint is a different job from second-by-second balancing, even though the same organisation frequently performs both. Roughly a third of the country sits outside any RTO, where wholesale arrangements are bilateral and planning works differently.
Why it matters for capacity
Market structure determines how a new load procures power and what price signals it faces. An energy-only market, a capacity market and a bilateral resource adequacy construct present a firm with three different problems, and the boundaries between them are invisible on a map of the country.
Related terms
Balancing authority · Interconnection · Planning reserve margin