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Electricity Transmission Pricing Principles

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Author Info

  • M. Soledad Arellano
  • Pablo Serra

Abstract

This article lays down economic principles that should govern electricity transmission pricing when peak-load pricing is used to set tariffs. Transmission systems perform three different functions: to transport energy, to substitute for generation capacity, and to increase competition in the system. It is shown that the generating companies should absorb long-run marginal costs so that the proper investment signals are given, whereas fixed costs should be borne by the transmission beneficiaries. In this paper it is shown that the latter differ depending on the function performed by the transmission system

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 Latin American Meetings with number 323.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:latm04:323

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Keywords: electricity transmission pricing; peak-load pricing;

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