Performance Metrics

For Independent System Operators 

And Regional Transmission Organizations

A Report to Congress

In Response to Recommendations of the United States Government Accountability Offi ce

April 2011

Federal Energy Regulatory Commission

Offi ce of the Chairman

888 First Street NE, Washington DC 20426
FEDERAL ENERGY REGULATORY COMMISSION

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T A B L E O F C ONTENTS

5 Message From The Chairman

6 Commission Staff Analysis

APPENDICES This report and the following appendices are provided online at www.FERC.gov.

A-1 APPENDIX A: 

 ISO/RTO Performance Metrics Development Process 

B-1 APPENDIX B: 

 Commission Staff Report

www.ferc.gov/industries/electric/indus-act/rto/metrics/staff -report-metrics.pdf

C-1 APPENDIX C: 

 Performance Metrics Summary

www.ferc.gov/industries/electric/indus-act/rto/metrics/summary-rto-metrics-report.pdf

D-1 APPENDIX D: 

 Report of California Independent System Operator Corporation

www.ferc.gov/industries/electric/indus-act/rto/metrics/caiso-rto-metrics.pdf

E-1 APPENDIX E: 

 Report of Midwest Independent Transmission System Operator, Inc.

www.ferc.gov/industries/electric/indus-act/rto/metrics/miso-rto-metrics.pdf

F-1 APPENDIX F: 

 Report of ISO New England, Inc.

www.ferc.gov/industries/electric/indus-act/rto/metrics/iso-ne-rto-metrics.pdf

G-1 APPENDIX G: 

 Report of New York Independent System Operator, Inc.

www.ferc.gov/industries/electric/indus-act/rto/metrics/nyiso-rto-metrics.pdf

H-1 APPENDIX H: 

 Report of PJM Interconnection, L.L.C.

www.ferc.gov/industries/electric/indus-act/rto/metrics/pjm-rto-metrics.pdf

I-1 APPENDIX I: 

 Report of Southwest Power Pool, Inc.

www.ferc.gov/industries/electric/indus-act/rto/metrics/spp-rto-metrics.pdf
APRIL 2011 • REPORT TO CONGRESS PAGE 5

PERFORMANCE METRICS FOR INDEPENDENT SYSTEM OPERATORS ƭ REGIONAL TRANSMISSION ORGANIZATIONS

Message from the Chairman

To the Chairman and Ranking Member of the Senate Committee on Homeland Security and 

Governmental Aff airs, and the Chairman and Ranking Member of the House Committee on Oversight 

and Government Reform: 

I am pleased to submit a report on Performance Metrics for Independent System Operators and 

Regional Transmission Organizations. Th is report is being submitted in response to recommendations 

of the Government Accountability Offi ce (GAO). As outlined in its report, FERC Could Take Additional 

Steps to Analyze Regional Transmission Organizations’ Benefi ts and Performance, GAO recommended that 

the Federal Energy Regulatory Commission (FERC) develop standardized measures or metrics to track 

the performance of Independent System Operator (ISO) and Regional Transmission Organization (RTO) 

operations and markets.

Under my direction, Commission Staff has led an 18-month voluntary and collaborative process 

with ISOs, RTOs, transmission customers, market participants and other stakeholders and interested experts to develop metrics that track the performance of ISO/RTO operations and markets in delivering 

benefi ts to consumers for those ISO/RTOs under the jurisdiction of the FERC. Th is information provides 

the framework for an ongoing analysis of ISO/RTO performance; as well as a starting point for further 

evolution of these measures into industry best practices by ISO/RTOs.

Th e culmination of these eff orts to date has been the submittal of performance metrics reports by 

each of the ISOs and RTOs which are attached in the Appendices to this report.. Th ese reports, that represent the fi rst step in a multi-year evaluation of performance for utilities under the jurisdiction of the FERC, 

provide a wealth of information on the ISO/RTO markets and operations over a fi ve-year period (2005 – 

2009) for 57 performance measures. As outlined in FERC’s FY 2009-2014 Strategic Plan, next steps in this 

evaluation include development of performance metrics in non-RTO regions in fi scal year 2011 followed 

by development of common metrics for both ISOs/RTOs and non-RTO regions – thereby allowing for 

comparisons across all electric regions and markets – and further evaluation of the performance results in 

subsequent fi scal years.

Jon Wellinghoff

Chairman

Federal Energy Regulatory Commission 
FEDERAL ENERGY REGULATORY COMMISSION

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Commission Staff Analysis

Th is Commission Staff analysis1 provides a high level overview of some of the more signifi cant aspects of the performance metrics submitted by the ISOs and RTOs2

 in Appendices D through I. Commission Staff plans to continue to evaluate this large body of information and analysis that has been compiled 

for the fi rst time. However, we believe the full value of this eff ort will take several years to materialize. In 

the longer term the metrics will assist the utility industry, stakeholders and the Commission in evaluating 

industry trends and best practices. 

Before discussing our overview of the performance results, the basic characteristics of the ISOs 

and RTOs under the Commission’s jurisdiction must be understood. Each ISO/RTO is responsible for 

managing the high-voltage electric transmission assets of its member utilities and the wholesale electricity 

market(s) for the region it serves. As can be seen on the ISO/RTO Map, however, there are signifi cant differences in the geographic scale of the ISOs and RTOs. NYISO and CAISO operate within a single state, 

while others operate in a multi-state environment, such as the Midwest ISO which operates in all or parts 

of 13 U.S. states and the Canadian province of Manitoba. Th ere are also diff erences in the scope of their 

respective operations. For example, in addition to providing open-access transmission services, SPP operates a single real-time balancing market for its members whereas other ISO/RTOs operate a number of 

markets, including longer-term energy markets, ancillary services markets and capacity markets. 

Th ese diff erences must be kept in mind when evaluating performance results across the ISOs and 

RTOs. Recognizing these diff erences, ISO/RTO performance can be compared in the following ways:

• Direct comparisons can be made of performance for certain metrics that refl ect activities under the 

control of ISOs/RTOs and that are not a function of the scale and scope of the ISOs/RTOs. Metrics 

in this category include a metric that compares ISO/RTO actual administrative spending with budget 

forecasts, as well as metrics on billing audits and customer satisfaction indices.

• Other metrics are best compared in terms of their performance trends over the 2005-2009 review 

period. Clearly, some of the performance results refl ect the impact of a wide range of factors beyond 

simply performance. Diff erences in market prices between the ISOs and RTOs, for example, refl ect 

1 The opinions and views expressed in this staff analysis do not neccessarily represent those of the Federal Energy Regulatory 

Commission, its Chairman, or individual Commissioners, and are not binding on the Commission.

2 The ISOs and RTOs providing information for this report are ISO New England (ISO-NE), New York Independent System Operator, Inc. (NYISO), PJM Interconnection, L.L.C. (PJM), Midwest Independent Transmission System Operator, Inc. (Midwest ISO), 

Southwest Power Pool, Inc. (SPP), and the California Independent System Operator Corporation (CAISO).
APRIL 2011 • REPORT TO CONGRESS PAGE 7

PERFORMANCE METRICS FOR INDEPENDENT SYSTEM OPERATORS ƭ REGIONAL TRANSMISSION ORGANIZATIONS

diff erent resource profi les in the various ISO/RTO regions. Since entities other than ISOs and RTOs 

develop and operate resources, ISOs and RTOs must work within the parameters of their given resource profi les to improve effi ciency in the markets within their regions. While market prices within 

ISOs/RTOs diff er, the fi ve year trend for each ISO/RTO will provide a better basis to compare the 

relative performance among ISOs/RTOs, particularly with respect to market metrics that more directly measure costs that can be infl uenced by ISO/RTO programs designed to make markets operate 

effi ciently, as discussed more fully below. 

• As explained in the narratives provided in the ISO/RTO performance reports, all metrics must be 

evaluated in the context of all of the factors that infl uence performance, to determine the extent to 

which the metrics are measuring ISO/RTO performance and the extent to which they refl ect the impact of other factors.
FEDERAL ENERGY REGULATORY COMMISSION

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Review of Performance Results

 ISO/RTO metrics were designed to measure performance on three dimensions: (1) market benefi ts; (2) organizational eff ectiveness; and (3) reliability. Th e following provides highlights of the performance results in each of these categories.

 Market Benefi ts 

 ISO and RTO markets provide benefi ts to energy producers and consumers to the extent their markets are competitive and their programs for making their markets operate more effi ciently are successful in 

lowering customer costs. ISO/RTO security-constrained economic dispatch3

 is intended to facilitate maximum participation by all resources and maximum utilization of the least-cost resources, thereby enhancing 

competition and ensuring a reasonable cost of energy for customers. ISO/RTO effi ciency programs, such 

as incentives to induce resources to be available, are intended to ensure the full benefi ts of competition are 

realized. 

Of the 16 metrics developed to measure the performance of ISOs and RTOs in delivering market 

benefi ts, and that are detailed in the reports in Appendices D through I, we focus below on one of the competition metrics, several effi ciency metrics, such as generator availability, and the market price measures.

Th e price-cost metric (Chart 1) compares the marginal price to the marginal cost of energy production. Th e closer the marginal price is to the marginal cost, the more competitive the market. Performance 

against this metric supports the proposition that all ISOs/RTOs have competitive markets, as refl ected in 

the close parity of marginal prices and marginal costs.4

 However, there are some diff erences in data reported by the ISOs and RTOs that result from historical diff erences during the reporting period. CAISO’s 

report for this metric relies on estimates based on bilateral price indices and cost estimates for the earlier 

years. Only the 2009 data represents actual market data, because CAISO did not have a forward energy 

market prior to that time. As a result, while the CAISO trend appears to show marginal prices and marginal costs converging, indicating more competitive conditions, such a conclusion may not be accurate. 

We also note that while it appears that the PJM price-cost markup in 2007 refl ects less competitive conditions, a substantial portion of the 2007 markup occurred on high-load days. Th erefore, it is likely that the 

higher prices were the result of administratively-determined scarcity pricing rather than the exercise of 

market power.

3 Security-constrained economic dispatch is the operation of generation facilities to produce energy at the lowest cost to reliably 

serve consumers, recognizing any operational limit of generation and transmission facilities. See Energy Policy Act of 2005, section 1234. 

4 SPP does not report a price-cost mark-up. Its Independent Market Monitor assesses its market to be competitive based on an 

evaluation of threshold tests for market-based rate applications.
APRIL 2011 • REPORT TO CONGRESS PAGE 9

PERFORMANCE METRICS FOR INDEPENDENT SYSTEM OPERATORS ƭ REGIONAL TRANSMISSION ORGANIZATIONS

Commission Staff plans to continue to monitor this metric in future reports as additional actual 

market data is generated and included in the metric.

 Additional indicators that support the conclusion that ISO/RTO markets are competitive are 

low market concentration indices, as discussed in more detail in the individual ISO/RTO performance 

reports,5

 and energy market prices are closely tracking fuel costs, discussed further below. Also, demand 

response entering markets as new resources have provided additional competition.

 Th e market benefi ts of ISO/RTO programs for making their markets operate more effi ciently can 

be measured by the generator availability, demand response availability and congestion management metrics. While resource availability and congestion management are infl uenced by market factors, incentive 

programs for resource participation and eff ective transmission planning by ISOs/RTOs to manage congestion can also improve effi ciency. 

5 See, for example, Appendix F at p. 106.

* Price-Cost Mark Up Defi nition: Load-weighted average mark up on cost-based off er divided by load-weighted price off er, expressed as a percentage. Positive percentage indicates that the marginal price is higher than the marginal cost. Negative percentage indicates the marginal cost is 

higher than the marginal price.

Source: Derived from content presented in Appendices D through I

 Chart 1: Price-Cost Mark Up 2005-2009*

ISO-NE Midwest ISO PJM

CAISO SPP* NYISO

* Data N/A for SPP

 2009

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 Generator availability (Chart 2) was in the range of 91 to 98 percent over the 2005 – 2009 period. It 

is noteworthy that the fi ve-year trend in ISO-NE generator availability refl ects improvements in the availability of generators using all fuels except coal generation that declined slightly. Th e trend in decreasing 

availability in PJM refl ects the impact of decreased availability of older coal-fi red generation units that 

outweighed reduced outage rates system-wide over this period.6

 It is not possible to assess the causes of 

the decreasing generator availability refl ected in the Midwest ISO generator availability metric because the 

Midwest ISO based the data reported for the years prior to 2009, in part, on North American Electric Reliability Corporation (NERC) industry-wide class average estimates7

 rather than on actual data provided by 

generators in the Midwest ISO.

 ISOs and RTOs have evaluated demand response availability during emergency events, such as the 

August 2006 heat wave, as discussed in their reports. It is not possible to show this information on a chart 

due to the lack of comparable information across all ISOs and RTOs. ISO-NE estimated the availability of 

6 See Appendix H at p. 300 for a complete discussion.

7 NERC estimates class average capacity factors for the various types of generation based on historical data.

 Chart 2: Generator Availability Range 2005-2009*

ISO-NE Midwest ISO PJM

CAISO SPP NYISO

*Generator Availability Defi nition: The capacity of a generator adjusted for planned outages, expressed as a percentage of hours available over a year.

Source: Derived from content presented in Appendices D through I.

90%

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APRIL 2011 • REPORT TO CONGRESS PAGE 11

PERFORMANCE METRICS FOR INDEPENDENT SYSTEM OPERATORS ƭ REGIONAL TRANSMISSION ORGANIZATIONS

all demand response resources, passive and active, to be 84 percent based on events from August 1, 2006 

through August 25, 2009. In NYISO, demand response provided 865 MW on August 2, 2006 and 345 MW 

on July 27, 2006 during emergency conditions. In PJM, demand response availability was 121 percent in 

2006 and 118 percent during testing in 2009/2010.

 Congestion costs8

 vary between the ISOs and RTOs, refl ecting diff erences in system topologies and 

shift s in loads over the evaluation period, as detailed in the discussion in the Appendices. Nonetheless, 

ISO/RTO programs can have an impact on congestion, for example through transmission planning initiatives. As an example, PJM’s Regional Transmission Expansion Plan includes increases in transmission 

system capacity that are expected to alleviate 90 percent of the current congestion costs in the region.

 Finally, with respect to the bottom line for consumers – their costs – security constrained economic 

dispatch and ISO/RTO effi ciency programs have yielded benefi ts. For example, PJM was able to reduce 

annual generation production costs by $122 million due to improved generation dispatch in 2009. Security 

constrained economic dispatch also reduced reliance by ISOs and RTOs on less effi cient and less reliable 

physical and manual procedures, such as transmission loading relief, to resolve system constraint problems. Midwest ISO was particularly successful in reducing transmission loading relief,9

 from 842 in 2006 

to 371 in 2009.

Market price trends in Chart 3 (on next page) refl ect the impact on market prices of market factors 

such as fuel costs as well as ISO/RTO effi ciency programs. Th e top two lines in Chart 3, the energy cost 

and total power cost metrics, illustrate the impact of fuel price trends. As detailed in the ISO/RTO performance reports, the nation-wide increase in fuel costs in 2008 and the decrease in 2009 were closely tracked 

in wholesale energy prices. More relevant to an assessment of ISO/RTO performance is the bottom line 

in Chart 3, the market price adjusted for fuel costs. Th is metric, when compared to unadjusted market 

prices, shows the impact of security constrained economic dispatch, incentives for improved generator 

availability, investment in more effi cient generating units and other factors on prices. Th erefore, this metric provides a measure of the effi ciency of the ISO/RTO markets, and how that effi ciency provides a benefi t 

to consumers in their cost of energy. It should be noted that each of the ISOs/RTOs uses a diff erent base 

year for their fuel adjustments and diff erent fuel mixes and therefore direct comparisons among the ISOs/

RTOs are not meaningful. Th e meaning and signifi cance of the trends in this metric for each ISO/RTO are 

of particular interest to Commission Staff and will be evaluated further in future reports. 

8 Congestion occurs when the physical limits of a line prevent load from being served with the least cost energy. Congestion costs 

measure the diff erence between the actual cost of energy and least cost energy.

9 Transmission loading relief is an action taken by a Reliability Coordinator to ensure that reliability is maintained within the operating limits of a transmission system. Such actions include curtailment of transmission transactions and load shedding.
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 Demand response participation reduced market prices, as discussed in the ISO/RTO reports. It is 

not possible to show this information on a chart due to the lack of comparable information across all ISOs 

and RTOs. ISO-NE estimates that demand response participation reduced real-time prices from $0.04 to 

$1.43/MWh over the 2008 – 2009 period. Demand response in NYISO provided an average price reduction of $0.27 per MWh during 2005 – 2009 resulting in a total savings of $44 million over this period. PJM 

estimates that demand response saved $650 million during the August 2006 event and that wholesale energy prices were reduced by more than $300 per MWh during the highest usage hours. Demand response 

in Midwest ISO provided approximately 3000 MW during the August 2006 emergency event, reducing 

clearing prices by $100 - $200 per MWh for savings of over $3 million.

 Chart 3: Market Price Trends 2005-2009

ISO-NE Midwest ISO PJM

CAISO1 SPP2 NYISO

1. The CAISO Load Weighted LMP and Total Power Cost is the same for years 2005-2008. 

2. Data for SPP is only available since 2007. The SPP Load Weighted LMP and Total Power Cost is the same for years 2007-2009. 

 

• Total Power Costs ($/MWh)

• Load Weighted LMP ($/MWh)

• Fuel Adjusted LMP ($/MWh)

Note: Total power costs include the cost of energy, transmission, capacity, ancillary services and administative costs. Load-weighted LMP represents 

the average load-weighted wholesale electricity energy spot prices in ISOs/RTOs. Fuel Adjusted LMP is derived by holding the fuel cost constant 

over the fi ve-year period and represents the average load-weighted wholesale electricity energy spot prices that result from this adjustment.

Source: Derived from content presented in Appendices D through I

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APRIL 2011 • REPORT TO CONGRESS PAGE 13

PERFORMANCE METRICS FOR INDEPENDENT SYSTEM OPERATORS ƭ REGIONAL TRANSMISSION ORGANIZATIONS

Organizational Effi ciency

 Th e fi ve organizational eff ectiveness metrics are designed to measure ISO/RTO performance in accomplishing their objectives in a cost-eff ective manner that provides value to market participants.

 Of particular interest in this regard is the administrative cost metric. Between 2005 – 2009, CAISO 

and PJM reduced administrative costs per MWh of load, NYISO costs per unit of load held steady and 

Midwest ISO’s, SPP’s and ISO-NE’s costs per unit of load increased, as illustrated in Chart 4. 

 Chart 4: Administrative Costs 2005-2009 (in $/Mwh of Load)

ISO-NE Midwest ISO PJM

CAISO SPP NYISO

Source: Derived from content presented in Appendices D through I

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Reliability

Th e 36 reliability performance metrics were designed to measure both the reliability of day-to-day 

operations and long-term reliability. We focus on one of the day-to-day operational performance metrics 

and one of the long-term reliability metrics. 

 Real-time dispatch reliability in ISOs and RTOs, a short-term reliability measure (shown in Chart 

5), was maintained at levels that exceeded national and regional reliability required standards, based on 

Control Performance Standard 1 and 2 metrics that measure the ability of Balancing Authorities to balance 

power demand and supply in real-time.10 Control Performance Standard 1 results were in the 188 to 123 

percent range, signifi cantly above the minimum required standard of 100 percent and Control Perfor10 Control Performance Standard 1 is a statistical measure of Area Control Error (or ACE, defi ned as the diff erence between actual 

and scheduled net interchange) in combination with the interconnection’s frequency error. Control Performance Standard 2 is 

a measure of the magnitude of ACE. Some RTOs use Balancing Authority ACE Limit (BAAL) as an alternative metric. This metric 

requires the Balancing Authority to balance its resources and demands so that ACE does not exceed the BAAL limit for a time 

greater than 30 minutes and limits the recovery period to no more than 30 minutes for a single event. 

 Chart 5: Balance of Power Demand and Supply 2005-2009

ISO-NE Midwest ISO1 PJM

CAISO SPP NYISO

Source: Derived from content presented in Appendices D through I

• CPS1 • CPS2

1. No CPS1 data available for 2005-2008. No CPS2 data available for 2005-2009. Midwest ISO was participating in Balance 

Authority Ace Limit (BAAL) Field Test. 

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APRIL 2011 • REPORT TO CONGRESS PAGE 15

PERFORMANCE METRICS FOR INDEPENDENT SYSTEM OPERATORS ƭ REGIONAL TRANSMISSION ORGANIZATIONS

mance Standard 2 results were in the 98 to 94 percent range, above the minimum required standard of 90 

percent. Th ese results indicate a strong level of compliance in this area of load-generation balancing under 

the current Reliability Standards.

 ISOs and RTOs also play a role in ensuring long-term reliability through their long-term transmission planning programs that evaluate and prioritize regional reliability transmission projects. ISO/RTO 

long-term reliability transmission planning resulted in the approval of hundreds of reliability transmission 

projects over the 2005 – 2009 period as illustrated in Chart 6. 

 Th e transmission planning process is a comprehensive assessment that evaluates the impacts of a 

wide range of resource and load trends and technology innovations on the transmission system to ensure 

that the regional plans incorporate those transmission projects with the greatest reliability and economic 

benefi t. Regional transmission plans include the consideration of demand response solutions to system 

requirements. Demand response accounts for 3 to 7 percent of installed capacity in a number of the ISO/

RTO markets.

 Chart 6: Approved Reliability Transmission Projects 2005-2009

ISO-NE Midwest ISO PJM

CAISO SPP NYISO

Source: Derived from content presented in Appendices D through I

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Next Steps

 In closing, the foregoing summary is intended to be a high level introduction to the performance 

metrics discussed in greater detail in the performance report appendices that follow. Commission Staff 

will be evaluating these reports further. In assessing these initial reports, the ISOs and RTOs have identifi ed several challenges that we will evaluate in the next report.

• Th e need for new transmission capacity to ensure reliability and to reduce congestion.

• Th e need for improved wind and solar forecasts to address an increase in variable energy resources.

• Th e need to address the control, communication and reliability challenges associated with intergrating 

demand response resources into energy and ancillary services markets. 

• Th e need for more accurate transmission project cost estimates, thereby ensuring that the growing 

number of transmission expansion projects stay on schedule and obtain the support of stakeholders. 

 

 Further detail on these performance results as well as a complete assessment of the 57 performance 

metrics are provided in the Performance Metrics Summary in Appendix C and the individual ISO/RTO 

reports in Appendices D through I. Also, the ISO/RTO Performance Metrics Development Process in Appendix A describes the voluntary and collaborative process undertaken by Commission Staff to develop 

ISO/RTO performance metrics with input from the ISOs and RTOs, transmission customers, market participants and other stakeholders and interested experts. Th is voluntary and collaborative approach will be 

used to develop performance metrics for non-ISO/RTO regions during fi scal year 2011. Th e Commission 

Staff Report in Appendix B provides a summary of comments from stakeholders and other interested parties and Commission Staff ’s recommendations that resulted in the fi nal list of metrics.

 
Appendix A

ISO/RTO Performance Metrics Development Process 

» Commission Staff , at the Chairman’s direction, initiated the development of ISO/RTO Performance 

Metrics in May 2009. 

» Th rough the summer and fall of 2009 Commission Staff developed a list of proposed performance 

metrics and discussed them with a team of ISO and RTO staff representing the ISOs and RTOs 

under the jurisdiction of the Federal Energy Regulatory Commission.1

» In January 2011 Commission Staff held focused outreach meetings with a variety of industry, 

consumer and state regulatory associations.2

» On February 2, 2010 Commission Staff issued the proposed performance metrics for comment 

and reply comment.

» On March 5 and March 19, 2010 comments and reply comments were fi led by 59 parties.3

» Commission Staff reviewed the comments and issued a Commission Staff Report on October 21, 

2010 (Appendix B). In the report, Commission Staff revised the proposed metrics based on the 

comments received and addressed issues raised by commenters. Commission Staff also requested 

that ISOs and RTOs submit reports with three to fi ve years of data for the recommended metrics.4

 

» On December 6, 2010 the ISOs and RTOs submitted their reports.

» On April 7, 2011 the Chairman submitted this report to Congress. 

1 These ISOs and RTOs are ISO New England, Inc. (ISO-NE), New York Independent System Operator, Inc. (NYISO), 

PJM Interconnection, L.L.C. (PJM), Midwest Independent Transmission System Operator, Inc. (Midwest ISO), Southwest Power 

Pool, Inc. (SPP), and the California Independent System Operator Corporation (CAISO).

2 American Public Power Association, Electricity Consumers Resource Council, National Rural Electric Cooperative Association, 

National Association of Regulatory Utility Commissioners, National Association of State Utility Consumer Advocates, Edison 

Electric Institute, American Wind Energy Association, New England Public Utilities Commissioners and the Electric Power Supply 

Association. 

3 The parties are listed in the Commission Staff Report in Appendix B.

4 These reports are attached as Appendices D through I.

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