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Transmission Policy in the United States

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Author Info
Paul L. Joskow

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Abstract

This paper provides an overview of the development of electric power transmission access, pricing and investment policies in the U.S. over the last 15 years and evaluates the current state of those policies. Pre-liberalization transmission access and pricing policies are reviewed since more recent policies have evolved from them. FERC’s efforts to ensure that transmission owning utilities provide non-discriminatory access and pricing to wholesale transmission customers, culminating in Order 888 and 889 are discussed. These rules did not respond to problems created by a highly balkanized transmission system and only partially responded to problems caused by common ownership and operation of transmission networks with generating and marketing businesses in the same regions. These problems motivated FERC to seek to create Regional Transmission Organizations (RTO) meeting a long list of criteria related to governance, network consolidation, network operations, transmission pricing and investment as reflected in Order 2000. The slow pace of “voluntary” reform following Order 2000 led FERC to issue a proposed Standard Market Design Rule (SMD) which provided more detailed prescriptions for wholesale market design, network operations, regional planning, resource adequacy, and transmission investment. The SMD rule confronted enormous resistance from groups of utilities and states that have not embraced an electricity sector liberalization agenda. However, many of the provisions of the SMD are being implemented by the RTOs and ISOs in the Northeast and Midwest. PJM’s market rules and transmission pricing, planning and investment policies are reviewed as an articulation of FERC’s RTO and SMD visions.

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Paper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 0417.

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Date of creation: Oct 2004
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Handle: RePEc:mee:wpaper:0417

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  1. Joskow, Paul L & Tirole, Jean, 1999. "Transmission Rights and Market Power on Electric Power Networks I: Financial Rights," CEPR Discussion Papers 2093, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Joskow, Paul & Tirole, Jean, 2004. "Merchant Transmission Investment," IDEI Working Papers 263, Institut d'Économie Industrielle (IDEI), Toulouse.
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  3. Joskow, P.L., 2003. "The Difficult Transition to Competitive Electricity Markets in the U.S," Cambridge Working Papers in Economics 0328, Faculty of Economics, University of Cambridge. [Downloadable!]
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  4. Paul L. Joskow, 2006. "Incentive Regulation for Electricity Networks," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 4(2), pages 3-9, 07. [Downloadable!]
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(explanations, 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.)

  1. Paul L Joskow, 2005. "Incentive Regulation In Theory And Practice - Electricity Distribution And Transmission Networks," Working Papers 0514, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
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  2. SMEERS, Yves, 2005. "How well can one measure market power in restructured electricity systems ?," CORE Discussion Papers 2005050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  3. Machiel Mulder & Victoria Shestalova & Marc Lijesen, 2005. "Vertical separation of the energy-distribution industry," CPB Documents 84, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  4. Paul L. Joskow, 2005. "Markets For Power In The United States - An Interim Assessment," Working Papers 0512, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
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  5. Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers 2008/8, Institut d'Economia de Barcelona (IEB). [Downloadable!]
  6. Joskow, P.L., 2005. "Patterns of Transmission Investment," Cambridge Working Papers in Economics 0527, Faculty of Economics, University of Cambridge. [Downloadable!]
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  7. Fischbeck, Paul & Vajjhala, Shalini, 2006. "Quantifying Siting Difficulty: A Case Study of U.S. Transmission Line Siting," Discussion Papers dp-06-03, Resources For the Future. [Downloadable!]
    Other versions:
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