Transmission access raises unresolved economic issues

Abstract

The electric utility industry is in the process of gradual change from a fully regulated industry to one of partial deregulation. Instead of relying on regulation to achieve a fair and equitable price to the consumer for electric energy, the reliance is placed more and more on market forces, through competition, to provide wholesale energy at the best market price. Clearly, open transmission access is required to create a viable competitive wholesale market for new generation resources. This article describes four unresolved, or at least partially unresolved, issues associated with transmission access for wholesale wheeling. Wheeling has been defined as the use of a utility's transmission facilities to transmit power for other buyers and sellers. At least three parties are involved in a wheeling transaction: a seller, a buyer, and one or more wheeling utilities that transmit the power from the seller to the buyer. This article considers wholesale or bulk wheeling only, and does not consider retail wheeling. The four unresolved economic issues described in this article pertain to transmission access: actual cost of providing transmission services; methodology or methodologies used in evaluating the cost of wheeling; contract path versus the actual power flows of the wheel; and issues associated with the formation of transmission regions.< <ETX xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">&gt;</ETX>