Regional Transmission Operator (RTO)

An RTO is a formal designation by the U.S. Federal Energy Regulatory Commission (FERC). In most cases, RTOs and Independent System Operators (ISOs) are the same in the U.S. Although FERC recognized that other organizational structures such as transcos could become RTOs, none have done so. The designation was created in FERC Order 2000, issued in December 1999. Following the order, FERC stated:

“Our objective in promulgating Order No. 2000 was to have all transmission-owning entities in the Nation, including non-public utility entities, place their transmission facilities under the control of appropriate RTOs in a timely manner. In Order No. 2000, the Commission concluded that regional institutions could address the operational and reliability issues confronting the industry, and eliminate undue discrimination in transmission services that can occur when the operation of the transmission system remains in the control of a vertically integrated utility. Furthermore, in Docket No. RM99-2-001 we found that appropriate regional transmission institutions could: (1) improve efficiencies in transmission grid management; (2) improve grid reliability; (3) remove remaining opportunities for discriminatory transmission practices; (4) improve market performance; and (5) facilitate lighter handed regulation. We stated our belief that appropriate RTOs can successfully address the existing impediments to efficient grid operation and competition and can consequently benefit consumers through lower electricity rates and a wider choice of services and service providers. In addition, substantial cost savings are likely to result from the formation of RTOs.” (Order 2000-A)

To be certified by FERC as an RTO, the following minimum characteristics and functions must be satisfied:

Minimum characteristics:

  • Independence 
  • Scope and regional configuration 
  • Operational authority 
  • Short-term reliability 


Minimum functions: 

  • Tariff administration and design 
  • Congestion management 
  • Parallel path flow 
  • Ancillary services 
  • OASIS and total transmission capability (TTC) and available transmission capability (ATC) 
  • Market monitoring 
  • Planning and expansion 
  • Interregional coordination 


Although the designation RTO represents a formal FERC certification, the terms RTO and ISO are often used synonymously.