An operational and institutional modular analysis framework of Transmission and System Operator Why Transmission and System Operators are not ideal ones

Transmission and System Operator (TSO) is the power flows externality market designer. And so, not only is TSO a module of power markets but its missions that are related to the management of power flows can also be studied thanks to a modular analysis. An ideal first-best TSO can then emerge as a benchmark for comparison with real TSOs. The governance structure of TSO accounts for the gap between such an ideal first-best and real TSOs. Then, although the economic theory specifies a unique arrangement to reach efficiency, the diversity of transmission governance accounts for the diversity of arrangements to manage power flows. Moreover the comparison between an ideal first-best TSO and two reference TSOs, PJM and NGC, with quite opposite features accounts for heterogeneous results among TSOs.