Can Nonprofit Transmission Be Independent?

Posted: 31 Oct 2000

See all articles by Robert J. Michaels

Robert J. Michaels

California State University, Fullerton - Department of Economics


Competitive markets for the production of electricity are growing, but the facilities that transmit and distribute it are still monopolies. To foster competition in transmission, FERC has set standards for forming regional transmission organizations. The form of those organizations is the subject of intense debate. Some interests favor nonprofit Independent System Operators (ISOs); others favor transmission companies ("Transcos"). The ISO is a political solution to an economic problem. The structure of an ISO invites inefficient choices and dominance by transmission owners. Its nonprofit form is no more than a veil under which interests of all sorts can manipulate its governance process to obtain benefits for themselves. A Transco is an imperfect economic institution, but its imperfections are known, its underlying logic is the same as that of any regulated corporation, and its monopolistic aspects are at least familiar if not perfectly solvable.

Suggested Citation

Michaels, Robert J., Can Nonprofit Transmission Be Independent?. Available at SSRN:

Robert J. Michaels (Contact Author)

California State University, Fullerton - Department of Economics ( email )

Fullerton, CA 92834
United States
714-278-2588 (Phone)
714-278-3097 (Fax)

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