April 3, 2002
John F. Kennedy School of Government
This document is the "Rapporteur's summary" of a special session of the Harvard Electricity Policy Group. Corporate governance is a hot topic. RTOs are not an exception from that discussion. It is hard enough to define roles and responsibilities when there are shareholders and a stock price. What should we be learning about governance of a new best like an RTO? California began with a stakeholder board, but has now discarded that model in favor of a board appointed by the state's governor. Other RTOs have employed a model in which the directors are independent persons who have no formal connection to any market participants. To whom, however, do these directors owe their primary duty? Are they fiduciaries for all of the stakeholders? Are they the protectors of the consumers, or the guardians of a broader public interest? How are the incentives of the directors aligned with these goals? Are the directors a self-perpetuating group, or should stakeholders or regulators have some say in their selection? How do stakeholders participate in decision-making under the board? What procedural rules guide or constrain the board's activities?
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