Transmission, congestion, pricing, and incentives [in electricitysupply]

The author argues that a fixation on managing congestion, rather than curing it, and the spectre of market power within local generation markets, enabled by inadequate transmission, threaten to deprive the public of much of the benefit of electric power industry deregulation     

German open access and transmission pricing within the Europeanframework

The author examines Germany's open access and transmission pricing policy within the European electricity supply framework and explains how the German government's main reasons for letting market participants jointly define the rules for network access are consistency and flexibility     

Sustainable energy management in urban transport: The public's response of road congestion pricing in Thailand

Fuel consumption of vehicles is one of the most vigorously debated issues in Thailand. Concerns about the effect of emissions from the vehicles and a significant reliance on imported oil provide legitimate reasons for government action to manage fuel consumption. There are several different policy measures available to affect the fuel-efficient vehicles as well as reduce the amount of driving. This paper presents the major policy measure studies namely congestion pricing, etc. In congestion pricing measure, we conducted a survey of 400 samples in Bangkok area. The purpose of the survey was to inform respondents about a policy designed to reduce freeway congestion and to estimate respondent support for this policy. After receiving extensive information about the policy, respondents were polled on whether they would support, i.e., vote for any or all of these options. The results of the congestion fee survey suggest that 22% of commuting motorists in Bangkok will support congestion fees on the freeways of the region. Public acceptance is substantially enhanced by promising to return at least some of the revenues in the form of reductions in other taxes.     

OPEC's pricing policy and the international transmission of oil price effects

We endogenize OPEC's pricing policy recognizing that oil price changes affect the real income of oil importers, and that changes in the real income of oil importers affect oil price changes. We determine real income, international trade flows, and prices in a three-region (DCs, OPEC, non-OPEC LDCs) econometric world model. Applying optimal control theory, we derive optimal oil pricing strategies. We find that not allowing for income feedback effects results in an upward bias in the total price elasticity of oil demand and in the optimal oil price path, neither of which is in OPEC's best interests.     

Asset life and pricing the use of electricity transmission infrastructure in Chile

Beyond the different approaches to set regulated prices for the use of infrastructure, a key parameter to determine regulated tariffs is the concept of asset life and how it changes with changes in the economic and regulatory context, which determines the optimal infrastructure investment and replacement policies. In this paper we look at the effects that changes in demand, the presence of substitutes and complements, the regulatory framework – both a pro or an anticompetitive framework – , scale economies, and the investment planning horizon, have on the economic service life of an asset and the tariffs for its use. We find that as the electric industry becomes more competitive, a negative effect on the economic service life of electric electricity transmission should be expected. Also, numerical experiments illustrate an inverse relation between scale economies on investment and the ESL of electricity transmission infrastructure. Further, we look at the biases on optimal investment that happen when optimal plans do not observe the life cycle of the investments and the ESL of the equipment, as well as the inconsistency and biases on optimal investment and replacement policies that might result when the Social Planner optimal investment plan lacks of a long-term commitment.     

Marginal cost pricing revisited

Marginal cost pricing is the appropriate approach for achieving economic efficiency. Its proper application requires that marginal costs must be estimated on the basis of long-run incremental costs which must include all current and future running costs plus full replacement costs of all existing plant and equipment. If this is not done, unwarranted and, most likely, uneconomic windfall losses or gains may occur. If there are temporary surpluses or shortages, short-run marginal costs, limited to these portions of overall supply, should be used to deal with them.     

The WOLF in pricing

The microgrid concept is generating a lot of interest, at least if we measure interest by the number of articles on the subject. But how much interest would there be if the generation and the microgrid were all to be owned by the same entity? Or if the energy consuming devices and the microgrid were all owned by the same entity? Would people be as interested if the grid and the generation and the consumers were a vertically integrated utility? At least some of the interest in the microgrid concept is related to the potential number of different entities that might participate in the ownership and operation of the generators and other equipment on the microgrid. The computer industry has long had the interoperability concept often called plug and play. The microgrid concept will allow greater interoperability on the electric grid, permitting generators to be placed in non-conventional places, such as having electric cars feed the grid from their owners' garages, not just be fed from the grid. But if we are to take advantage of this interoperability, we need ways to encourage participants, paying them handsomely to provide electricity when and where it is needed and charging them dearly when and where it is appropriate. Thus, the electric car may face a very low rate for charging in some locations at some times and may be rewarded with a very high rate for supplying power at other locations at other times. Instead of just "plug and play" that is permitted by the microgrid concept, we also need to be able to "plug and pay," where I emphasize the financial concept of "pay" instead of the engineering concept of "play."     

The pricing of off-peak power

Benefit-cost analysis is used to show that even with only one electricity production technique, marginal cost pricing of electricity in a firm off-peak period might reduce social welfare rather than improve it. This may occur when there are more periods with dissimilar demands for power than feasible prices for electricity. Thus the conclusion is reinforced that it may be more important to charge a higher price for electricity during periods of peak demand than a price equal to marginal running costs during the most off-peak hours.     

Energy pricing in the UK

One of the principal purposes of this paper is to define the appropriate base for energy prices in the UK, while another is to consider how it can be measured. Since the energy subsector of the UK economy is dominated by the nationalized coal, gas and electricity industries, it is also necessary to consider the relationship between this price base and the guidelines for the economic and financial control of these industries which have been set by successive governments. This is especially important for any evaluation of the gas and electricity price increases recently announced by the UK government because the government appears to have used the financial targets which it has set these industries to determine the specific price increases.     

Dynamic pricing of wind futures

Daily average wind speeds are dynamically modelled by a continuous-time autoregressive model with seasonal mean and volatility. Futures prices based on an index of aggregated wind speeds are derived, and it is shown that the Samuelson effect breaks down. The volatility of these futures will decrease when approaching maturity, an effect which is explained by the memory in higher-order autoregressive models.     

An integrated congestion management strategy for real-time systemoperation

This letter discusses congestion management from an open access viewpoint and an integrated congestion management procedure for a real-time operational environment is developed. Market price response and coordination of dispatch by the independent system operator are incorporated into the proposed procedure to achieve an overall strategy     

Multi-objective congestion management incorporating voltage and transient stabilities

Congestion in a power system is turned up due to operating limits. To relieve congestion in a deregulated power market, the system operator pays to market participants considering their bids to alter their active powers. After relieving congestion, the network may be operated with a reduced voltage or transient stability margin because of hitting security limits or increasing the contribution of risky participants. The proposed multi-objective framework for congestion management in this paper simultaneously optimizes competing objective functions of congestion management cost, voltage security, and dynamic security. The voltage stability margin and corrected transient energy margin are employed as indices to be incorporated into the multi-objective congestion management. A fuzzy decision maker is proposed to derive the most efficient solution among Pareto-optimal solutions of multi-objective mathematical programming problem. Results of testing the proposed method on the New-England test system elaborate the efficiency of the proposed method.     

Towards dynamic security-constrained congestion management in openpower market

Security and reliability are major concerns in the deregulated and unbundled electricity supply industry due to the increased number of market participants and the changing demand patterns. This letter presents an approach and investigates the impact of incorporating dynamic security considerations in an open market environment. It is possible to reschedule the real power generation along with curtailment of real power loads/transactions to make the system dynamically secure after a fault. A conceptually plausible and computationally feasible approach for the solution of this problem has been developed for a system with a mix of pool and contract dispatches     

Causal responsibility and peak load pricing

This article clarifies the basis for peak load pricing when some customers have a steady demand and others have a specific peak period demand. Causal responsibility for peak capacity rests on both types of customers. Peles, in this journal, has proposed that electricity consumption beyond the off-peak period monthly average be priced at a higher rate than other consumption. Customers consuming only on the peak would face higher prices than those who consumed relatively less during the peak. However, such a price structure can discourage economic off-peak consumption and encourage uneconomic peak period consumption. Both steady and nonsteady demanders must face the same price signal during peak periods for the achievement of efficiency, so long as each group imposes the same costs on the system.     

Energy pricing policies in developing countries

Government energy pricing policies have multiple and often conflicting objectives: economic efficiency, government revenues (for both parastatal supply companies and the treasury), maintenance or improvement of income distribution, promotion of particular sectors (such as industrial exporters and local resource development) demand management and security of supply. It is important to examine the impacts on and the trade-offs between these objectives resulting from alternative policies in order to assist in policy selection. This article discusses the more important objectives and their conflicts and outlines an approach for the quantitative examination of alternative policies.     

The pricing of US crude oil

The present system of pricing US crude oil is both wasteful and counter-productive, argues Mr Renshaw. He points to numerous ways to improve upon the existing pricing system ranging from immediate deregulation of petroleum prices to a set of compensating tax increases and a redesigned pricing system which would achieve gradual deregulation in a more efficient manner. If price controls are retained for an extended period of time, an economic case can be made for new product standards and other non-price rationing schemes which would tend to constrain energy consumption to about the level which would prevail if prices were unregulated.