Environmental Engineering Reference
In-Depth Information
bene
ciaries of proposed transmission investments to enable those proposals to be
evaluated. Transmission is inherently about moving electric power between loca-
tions, and the analysis of the value of such investment requires calculation of
locational impacts on generation and load. In principle, this information should be
useful to allocate costs according to the bene
ts
may be computed jointly for bunches of investments making expansion plans.
Then, allocating the bene
ciary-pays principle, though bene
ts of speci
c investments to agents may probably require
determining which of the bene
ts of a whole expansion plan are caused by each
speci
c investment in the plan.
4.2 Transmission Charges Should Be Independent
of Commercial Transactions
Given that transmission charges should be levied on those who bene
t from the
existence of any given transmission facility, tariffs should depend on the location of
the users in the network and on the expected temporal patterns of power injection
—
—
—
—
for generators
and withdrawal
for loads
, but not on the commercial transac-
—
—
tions
. This means that a generator located in a
system A that trades with a load serving entity in a system B should pay the same
transmission charge as if, instead, it were contracted to supply a neighboring load
sited within its own system. This principle follows from what is called
that is, who trades with whom
“
the single
system paradigm
: if open network access exists and there are no barriers to system-
wide trade, the decentralized interaction between systems and their agents should
ideally be identical to the outcome of a system-wide ef
”
cient generation dispatch,
regardless of who trades with whom. The independence of the transmission charges
from the commercial transactions directly follows. The application of this principle
should not be affected by the existence of any contracts signed by any agents, since
they should modify neither the physical real-time ef
cient dispatch of generation
nor the demand.
Failure to make transmission charges independent from commercial transactions
can result in
or piling up of transmission charges, where network users
are required to pay accumulating fees including those for the areas through which
their power is deemed to pass between the buyer and seller. Pancaking makes
transmission charges depend on the number of administrative borders between
buyer and seller. Such pricing tends to sti
“
pancaking
”
e trade and to prevent buyers from
accessing low cost sellers. The resulting perverse incentives could lead to inef
cient
transmission investments and would signi
cantly complicate operations in net-
works. Pancaking has traditionally occurred in both the EU and the US. It has been
banned in the IEM of the EU about 10 years age, but may still occur in interregional
trade in the US.
Search WWH ::
Custom Search