The diversity of design of TSOs
It is puzzling today to explain diversity and imperfection of actual transmission monopoly designs in competitive electricity markets. We argue that transmission monopoly in competitive electricity markets has to be analyzed within a [Wilson, R, 2002. Architecture of the power markets. Econometrica 70(4), 1299-1344] modular framework. Applied to the management of electricity flows, at least three modules make the core of transmission design: (1) the short run management of network externalities; (2) the long run management of network investment; and (3) the coordination of neighboring transmission system operators (TSOs) for cross-border trade. In order to tackle this diversity of designs of TSOs, we show that for each of these modules, three different basic ways of managing them are possible. Among the identified 27 options of organization, we define an ideal TSO. Second, we demonstrate that (1) monopoly design differs from this ideal TSO and cannot handle these three modules irrespective of the "institutional" definition and allocation of property rights on transmission, while (2) definition and allocation of property rights on transmission cannot ignore the existing electrical industry and transmission network structure: they have to complement each other to be efficient. Some conclusions for regulatory issues of TSOs are derived from this analysis of network monopoly organization.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Perez-Arriaga, Ignacio J. & Olmos, Luis, 2005. "A plausible congestion management scheme for the internal electricity market of the European Union," Utilities Policy, Elsevier, vol. 13(2), pages 117-134, June.
- Paul L. Joskow, 2013.
"Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks,"
in: Economic Regulation and Its Reform: What Have We Learned?, pages 291-344
National Bureau of Economic Research, Inc.
- Joskow, P.L., 2006. "Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks," Cambridge Working Papers in Economics 0607, Faculty of Economics, University of Cambridge.
- 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.
- Armstrong, Mark & Vickers, John, 1998. "The Access Pricing Problem with Deregulation: A Note," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 115-21, March.
- Bushnell, James & Stoft, Steven, 1997.
"Improving Private Incentives for Electric Grid Investment,"
Staff General Research Papers
31549, Iowa State University, Department of Economics.
- Bushnell, James B. & Stoft, Steven E., 1997. "Improving private incentives for electric grid investment," Resource and Energy Economics, Elsevier, vol. 19(1-2), pages 85-108, March.
- Glachant, J.M. & Saguan, M., 2007.
"An Institutional Frame to Compare Alternative Market Designs in EU Electricity Balancing,"
Cambridge Working Papers in Economics
0724, Faculty of Economics, University of Cambridge.
- Jean Michel Glachant & Marcelo Saguan, 2007. "An Institutional Frame to Compare Alternative Market Designs in e U Electricity Balancing," Working Papers 0701, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Robert Wilson, 2002. "Architecture of Power Markets," Econometrica, Econometric Society, vol. 70(4), pages 1299-1340, July.
- Carliss Y. Baldwin, 2008. "Where do transactions come from? Modularity, transactions, and the boundaries of firms," Industrial and Corporate Change, Oxford University Press, vol. 17(1), pages 155-195, February.
- Glachant, Jean-Michel & Pignon, Virginie, 2005. "Nordic congestion's arrangement as a model for Europe? Physical constraints vs. economic incentives," Utilities Policy, Elsevier, vol. 13(2), pages 153-162, June.
- Richard Green, 2007. "Nodal pricing of electricity: how much does it cost to get it wrong?," Journal of Regulatory Economics, Springer, vol. 31(2), pages 125-149, April.
- Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-42, September.
- Rey, Patrick & Tirole, Jean, 2003.
"A Primer on Foreclosure,"
IDEI Working Papers
203, Institut d'Économie Industrielle (IDEI), Toulouse, revised Nov 2005.
- Costello, Kenneth W., 2001. "Interregional Coordination versus RTO Mergers: A Cost-Benefit Perspective," The Electricity Journal, Elsevier, vol. 14(2), pages 13-24, March.
- Ehrenmann, Andreas & Smeers, Yves, 2005. "Inefficiencies in European congestion management proposals," Utilities Policy, Elsevier, vol. 13(2), pages 135-152, June.
- Armstrong, M. & Doyle, C. & Vickers, J., 1995.
"The access pricing problem: a synthesis,"
Discussion Paper Series In Economics And Econometrics
9532, Economics Division, School of Social Sciences, University of Southampton.
- Brunekreeft, G. & Neuhoff, K. & Newbery, D., 2004.
"Electricity transmission: an overview of the current debate,"
Cambridge Working Papers in Economics
0463, Faculty of Economics, University of Cambridge.
- Brunekreeft, Gert & Neuhoff, Karsten & Newbery, David, 2005. "Electricity transmission: An overview of the current debate," Utilities Policy, Elsevier, vol. 13(2), pages 73-93, June.
- Masahiko Aoki, 2001. "Toward a Comparative Institutional Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011875, June.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:36:y:2008:i:9:p:3323-3332. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.