Independent System Operators and Biomass Power

Since the Federal Energy Regulatory Commission issued its landmark open access transmission rule in 1996, the idea of creating and establishing independent system operators (ISOs) has gained momentum. ISOs may help combine individual utility transmission systems into more regional transmission networks, which ultimately will allow biomass companies to transmit power over longer distances while paying a single transmission rate. To the extent that ISOs are combined or operated with power exchanges, however, biomass companies will likely face even more competitive market pressures. Few operators have experience with ISOs and power exchanges, but preliminary results show that short-term electricity market prices are probably too low for most biomass companies to compete against. Without policy measures, biomass companies may have to pursue strategic opportunities with short-term, spot-market sales; direct bilateral sales to customers; alternative power exchanges; and perhaps a ''green'' pow er market and sales to ancillary service markets. In addition, prices will likely be more volatile in a restructured market so biomass generators should be selling during those times.