Charging transmission [power transmission pricing

Abstract

Establishing a realistic pricing model across Europe is crucial to market liberalisation. EU governments have agreed to open their electricity and gas markets completely and two amending directives to EC 96/92 are now in the final stages of the EU legislative process. The directives specify market opening dates for electricity and gas of 1 July 2004 for nonhousehold users, and 1 July 2007 for household users. Accompanying these directives will be the creation of an EC regulation that is scheduled to enter into force in July 2004. The regulation will establish a set of 'guidelines' that will apply to transmission charging and congestion management arrangements in each member state. Unlike a directive, which has to be implemented into national legislation, a regulation is directly applicable in each member state. The guidelines will need to address the harmonisation of transmission charging if competition in electricity supply is to be facilitated. Most obviously the division of transmission costs between generation and customer load must be settled. Other wise if a supplier, for example, is seeking to ship electricity from an area where transmission charges fall predominantly on generators to one where charges fall predominantly on customers then it will be exposed to an innate disadvantage compared to a supplier who ships electricity in the opposite direction.