Nodal Pricing and Transmissions Losses. An Application to a Hydroelectric Power System
AbstractSince January 1st, 1997, the wholesale electricity market in the U.S. has been open to competition through FERC Order 888. In order to satisfy the reciprocity requirements which were imposed by FERC to foreign utilities, Hydro-Québec made her transmission grid accessible to third parties. A single flat rate is applied to account for transmission losses; location and time of use play no role. Hydro-Québec is a hydro based utility and it has very long linear high voltage power lines which link hydro power sites in the north to consumption centres in the south. In this paper, we compare three different methods of incorporating transmission losses into nodal prices for a simpplified model of Hydro-Québec electric network: flat rate, linear power loss rates, and quadratic power loss rates. The latter two vary by node and time of use. We estimate that nodal price differences between the flat rate and the quadratic power loss rates can be as large as 27.8% on the producer side and 32.7% on the consumer side. The implications of such price differences for the location of economic activity over the service area could be significant.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by GREEN in its series Cahiers de recherche with number 0007.
Date of creation: 2000
Date of revision:
Contact details of provider:
Postal: Bureau 2245, Pavillon J.-A.-DeSève, Québec (Québec) G1K 7P4
Phone: (418) 656-2096
Fax: (418) 656-7412
Web page: http://www.green.ecn.ulaval.ca
More information through EDIRC
Electricity; Transmission Pricing; Hydro Power;
Other versions of this item:
- Bernard, Jean-Thomas & Guertin, Chantal, 2002. "Nodal Pricing and Transmission Losses: An Application to a Hydroelectric Power System," Discussion Papers dp-02-34, Resources For the Future.
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gilbert,Richard J. & Kahn,Edward P. (ed.), 1996. "International Comparisons of Electricity Regulation," Cambridge Books, Cambridge University Press, number 9780521495905, October.
- Hsu, Michael, 1997. "An introduction to the pricing of electric power transmission," Utilities Policy, Elsevier, vol. 6(3), pages 257-270, September.
- Green, R., 2004.
"Electricity Transmission Pricing: How much does it cost to get it wrong?,"
Cambridge Working Papers in Economics
0466, Faculty of Economics, University of Cambridge.
- Richard Green, 2004. "Electricity Transmission Pricing: How much does it cost to get it wrong?," Working Papers 0420, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Paul L. Joskow & Richard Schmalensee, 1988. "Markets for Power: An Analysis of Electrical Utility Deregulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262600188, June.
- Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-42, September.
- Holmberg, P. & Lazarczyk, E., 2012.
"Congestion management in electricity networks: Nodal, zonal and discriminatory pricing,"
Cambridge Working Papers in Economics
1219, Faculty of Economics, University of Cambridge.
- Holmberg, Pär & Lazarczyk, Ewa, 2012. "Congestion Management in Electricity Networks: Nodal, Zonal and Discriminatory Pricing," Working Paper Series 915, Research Institute of Industrial Economics.
- Jean-Thomas Bernard & Frédéric Clavet & Jean-Cléophas Ondo, 2004. "Electricity Production and CO2 Emission Reduction: Dancing to a Different Tune Across the Canada-US Border," Canadian Public Policy, University of Toronto Press, vol. 30(4), pages 401-426, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Johanne Perron).
If references are entirely missing, you can add them using this form.