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Electricity Transmission Pricing Principles

Author

Listed:
  • 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

Suggested Citation

  • M. Soledad Arellano & Pablo Serra, 2004. "Electricity Transmission Pricing Principles," Econometric Society 2004 Latin American Meetings 323, Econometric Society.
    • Handle: RePEc:ecm:latm04:323
    as

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    More about this item

    Keywords

    electricity transmission pricing; peak-load pricing;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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