Transmission Policy In The United States
AbstractThis 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 first 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 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 had 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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Bibliographic InfoPaper provided by Regulation2point0 in its series Working paper with number 110.
Date of creation: Oct 2004
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Other versions of this item:
- Joskow, P.L., 2004. "Transmission Policy in the United States," Cambridge Working Papers in Economics 0454, Faculty of Economics, University of Cambridge.
- Paul L. Joskow, 2004. "Transmission Policy in the United States," Working Papers 0417, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- K2 - Law and Economics - - Regulation and Business Law
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- Joskow, P. & Tirole, J., 2003.
"Merchant Transmission Investment,"
Cambridge Working Papers in Economics
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- Joskow, Paul & Tirole, Jean, 2004. "Merchant Transmission Investment," IDEI Working Papers 263, Institut d'Économie Industrielle (IDEI), Toulouse.
- Paul Joskow & Jean Tirole, 2003. "Merchant Transmission Investment," Working Papers 0304, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
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- Joskow, P.L., 2003.
"The Difficult Transition to Competitive Electricity Markets in the U.S,"
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- Paul L. Joskow, 2003. "The Difficult Transition to Competitive Electricity Markets in the U.S," Working Papers 0308, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- 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.
- 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.
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