The federal push for regional transmission organizations.
The California crisis was still unfolding when FERC issued Order 2000 in December 1999 — a rule that went further than Order 888 in pushing for competitive wholesale markets. Order 2000 didn't just require open access to transmission; it encouraged utilities to join or form Regional Transmission Organizations (RTOs), entities that would take on the full range of grid management functions across large geographic regions.
An RTO differed from an ISO in scope: while ISOs were often created for a single state or utility territory, RTOs were designed to span multiple states and dozens of utilities, creating truly regional markets with millions of megawatt-hours traded daily.
Order 2000 specified seven functions that an RTO must perform: short-term reliability, tariff administration, market monitoring, congestion management, parallel path flows, transmission expansion planning, and interregional coordination. This functional specification was deliberately comprehensive — FERC wanted RTOs that would genuinely manage the grid, not just provide an administrative umbrella for existing utility operations.
Through the early 2000s, the RTO map of the United States crystallized into its current form. PJM, already operating as an ISO, expanded to include utilities in Illinois, Michigan, Ohio, and eventually much of the eastern United States. MISO (Midwest ISO, later just "MISO") formed to serve the Upper Midwest and parts of the South. SPP (Southwest Power Pool) expanded from a coordination mechanism into a full RTO. ISO-NE formalized its RTO status. CAISO survived the crisis and remained California's grid operator.
Notably absent: most of the Southeast and parts of the Mountain West, where vertically integrated utilities successfully resisted RTO formation, arguing that the existing bilateral trading model and tight power pools were working adequately.
Today, roughly two-thirds of Americans live in RTO service territories where wholesale electricity prices are set by competitive markets. The remaining third — primarily in the Southeast, Mountain West, and parts of the Pacific Northwest — live in traditionally regulated territories where vertically integrated utilities still control generation and transmission.
The contrast provides a natural experiment in electricity market design. Researchers continue to debate which model produces better outcomes — lower prices, higher reliability, more innovation — and the answers are more complex than either camp admits.
Washington, D.C., December 20, 1999. FERC Chairman James Hoecker signed Order 2000 as the logical successor to Order 888 — moving from "open access" to actual transfer of regional grid control to an independent operator. Every public utility had until October 2000 to file an RTO proposal. The response was a rush of competing regional designs: Desert STAR for the Southwest, GridFlorida and GridSouth for the Southeast, multiple proposals for the Midwest. Most collapsed within two years under utility opposition and political resistance. In the Southeast, vertically integrated utilities successfully argued they were providing reliable service without an RTO and were ultimately left outside the mandatory structure. The October 2000 filing map was essentially a political map of where deregulation had genuine support — New England, the mid-Atlantic, and the Midwest coalesced into functional RTOs; the Southeast did not. That geography is largely unchanged today.
FERC — Order No. 2000 Final Rule, December 20, 1999 Renewable Energy World — "FERC Order 2000 Drives RTO Initiatives"