How America's Power Regions Chose Their Futures

A look at how U.S. power regions diverged in their electricity market designs after key FERC orders.

Published on Mar. 2, 2026

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In the 1990s, FERC issued orders 888 and 2000 that encouraged the formation of Regional Transmission Organizations (RTOs) to manage competitive wholesale electricity markets. Some regions embraced RTOs while others rejected restructuring, leading to a national experiment in market design. Nearly 30 years later, the outcomes of these divergent paths are becoming clear, with organized markets delivering cost savings but also facing challenges, while the vertically integrated model of the Southeast has weakened but not collapsed.

Why it matters

The choice between competitive wholesale markets and vertically integrated utilities has had major implications for electricity prices, renewable energy development, and the ability to adapt to an evolving grid. As the energy transition accelerates, the performance of these different models is coming under increasing scrutiny.

The details

FERC Order 888 in 1996 required open access to transmission, while Order 2000 in 1999 encouraged but did not mandate the formation of RTOs. Regions like PJM, CAISO, and NYISO embraced RTOs, while the Southeast largely rejected restructuring. The RTO model has delivered cost savings through centralized dispatch and better integration of renewables, but has also faced challenges like capacity market design. The vertically integrated model of the Southeast has weakened but maintained advantages like low electricity rates, though it has struggled with issues like the Vogtle nuclear plant cost overruns.

  • FERC issued Order 888 on April 24, 1996.
  • FERC issued Order 2000 three years later in 1999.
  • PJM transitioned to a formal ISO in 1997 and full RTO status in 2001.
  • CAISO was formed in 1998 under Assembly Bill 1890.
  • MISO launched its energy market in 2005.
  • ERCOT restructured under Senate Bill 7 in 1999.
  • The Southeast Energy Exchange Market (SEEM) launched in November 2022.

The players

PJM Interconnection

A regional transmission organization that manages the electric grid and wholesale electricity market in all or parts of 13 states and the District of Columbia.

California Independent System Operator (CAISO)

The independent system operator that manages the electric grid and wholesale electricity market in California.

Southern Company

A major electric utility holding company that operates in the Southeast and has resisted electricity market restructuring.

Duke Energy

One of the largest electric power holding companies in the United States, operating in the Southeast and also resisting electricity market restructuring.

Federal Energy Regulatory Commission (FERC)

The federal agency that regulates the interstate transmission of electricity, natural gas, and oil.

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What’s next

The data center boom is adding fresh urgency to the debate over electricity market design, as large tech companies seek transparent pricing, rapid interconnection, and the ability to contract directly for clean energy - all things that organized markets facilitate more readily than the bilateral model. This pressure, combined with accumulating evidence of RTO cost savings, is pushing even the most resistant regions toward incremental market reforms.

The takeaway

The choice between competitive wholesale markets and vertically integrated utilities has had major implications for electricity prices, renewable energy development, and the ability to adapt to an evolving grid. As the energy transition accelerates, the performance of these different models is coming under increasing scrutiny, with organized markets delivering cost savings but also facing challenges, while the vertically integrated model of the Southeast has weakened but not collapsed.