Network Costs and the Regulation of Wholesale Competition in Electric Power

Publication Type

Report

Date Published

12/1993

LBNL Report Number

LBNL-34930

Abstract

We characterize the cost function for electric power transmission. It is complex and non-linear, exhibiting scale economies over its range. The social planning problem for network transmission expansion is illustrated with a simple numerical example. The regulatory problem for joint generation and transmission cost minimization is addressed. It is shown that information asymmetries about the transmission cost function can lead to coordination losses when there is competition in the generation segment. We parametrize the tradeoff between potential coordination losses in transmission planning and benefits of competition and examine some potential alternatives for improved regulation of the transmission planning process.

Year of Publication

1993

Organization: