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The document examines the challenges RTOs face as the U.S. grid shifts from large central generators to variable renewables and distributed energy resources (DERs). It argues that 'flexibility'—the ability to respond to changes in supply and demand across various timeframes—is essential for reliability and cost minimization. The authors recommend eliminating self-scheduling for all generators and imports, preserving negative pricing, and improving the coordination between natural gas and electricity markets. It also suggests creating technology-neutral products that value specific capabilities, such as ramping and frequency response, and highlights successful examples like MISO's Dispatchable Intermittent Resource category and CAISO's Flexi-Ramp product.

The paper identifies five criteria for effective congestion management in Europe: integrated national and international approaches, joint allocation of transmission rights, and integration with day-ahead, intraday, and balancing markets, alongside transparency. It argues that current European systems suffer from inefficiencies in domestic redispatch, international capacity allocation, and dynamic management. While zonal pricing is used in some regions, the authors contend that locational marginal pricing (nodal pricing)—already implemented in six US ISO markets—is the superior candidate for addressing these weaknesses. To mitigate political opposition and financial risks associated with nodal pricing, the document suggests using Financial Transmission Rights (FTRs) to compensate affected stakeholders and hedge price volatility.