Transmission access rights and tariffs (original) (raw)
1997, Electric Power Systems Research
Much of the current debate in the US surrounding the deregulation of electric power supply and the associated restructuring of that heretofore vertically integrated industry has been concerned with measures to nullify or eradicate any market power based on control of access to transmission by the traditional utilities. The debate has had to do with various degrees of 'unbundling' of control of the two assets (generation and transmission) in order to ensure that all power suppliers-various types of independent power producers and power marketers-have access to transmission that is as unfettered as that of the owners. The argument of this paper is that any assigning of transmission access 'rights' to power suppliers of any ilk is de facto a 'rebundling' of what it has been desired to 'unbundle.' In addition, assigning transmission access rights to suppliers is bound to inflate the demand for transmission capacity, whether in the short or the long run, because multiple suppliers will seek to secure access rights for prospective transactions for which they are competing. An alternative approach is suggested, based on the facls that existing transmission has been provided to ensure adequate and reliable supply to existing loads, that the relation of transmission capacity and loads is stable (whereas the relation of supply and loads, and hence of supply and transmission will be increasingly volatile), and that transmission constraints have conventionally been defined and monitored in terms of imports (to loads) across critical interfaces (cut sets). From this perspective, assigning of transmission access rights to loads (as their proportionate share of imports across critical interfaces), and charging for such access in the traditional mode of regulated return-on-investment: tariffs would avoid almost all the difficulties hobbling the current debate.
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