Transmission tariffs and planning in the central American regional electricity market

Abstract

This paper discusses transmission pricing and planning in the newly created regional electricity market in central America, the first in the world to implement a regional "jurisdiction" where a regulatory commission operates. The regional operator, regulatory framework and market rules, accompany the infrastructure of a regional network that adds to the existing inter-connectors a new 230 kV system of more than 1,800 km (SIEPAC) linking the six countries. The regional market is not replacing the national markets but it is complementing them. This creates special challenges for network operations, transmission pricing, energy market procedures, interfaces with national markets, and planning of network expansions. The regional system operator identifies beneficial transmission additions for the regional network but also other market participants can promote ldquorisk expansionsrdquo that are considered by the regulation in compatible terms to the centrally planned expansions. Locational signals, above and beyond the ones created by the nodal prices are implemented through toll charges that also help decrease the required revenue shortfall that nodal prices are not able to cover.