The Problem
In many states, monopoly utilities control both the creation and distribution of electricity, stifling competition and innovation in the energy sector. This vertical integration allows them to create inefficient energy distribution systems that are expensive to consumers and harmful to the environment.
The Solution
Independent distribution system operators (IDSOs), under public, cooperative, or nonprofit ownership, are a viable alternative, placing an entity that is not incentivized by profits at the center of the decision-making process, eliminating the conflicts of interest created by for-profit utility ownership.
This independence ensures that decisions regarding interconnection, data, and procurement are made transparently and in the best interest of consumers and the environment, rather than shareholder profits. IDSOs can also foster a competitive marketplace by encouraging innovation in grid management and energy services.
The IDSO framework gained popularity after it was endorsed by former FERC Chair Jon Wellinghoff in 2014. Under an IDSO, existing utilities would still be responsible for electricity generation and owning the distribution system.