Transport Pricing of Electricity Networks

244 Pages·2003·4.899 MB·English

by  François Lévêque (auth.)

TRANSPORT PRICING OF ELECTRICITY NETWORKS
Transport Pricing of Electricity
Networks
by
Fran~ois Leveque
Ecole des Mines de Paris,
France
Springer-Science+Business Media, B.V
A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-1-4419-5355-1 ISBN 978-1-4757-3756-1 (eBook)
DOI 10.1007/978-1-4757-3756-1
Printed on acid-free paper
All Rights Reserved
© 2003 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers, Boston in 2003 .
Softcover reprint of the hardcover 1s t edition 2003
No part of this work may be reproduced, stored in a retrieval system, or transmitted
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or otherwise, without written permission from the Publisher, with the exception
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Contents
Contributing Authors Xl
Preface by Jean Syrota xv
General Introduction by Fran90is Leveque XVll
Part I: Economic tariff-setting, law and accounting 1
Chapter 1: Legal constraints and economic principles 3
FRANCOIS LEVEQUE
Chapter 2: Cost calculation 35
NICOLAS CURIEN
Chapter 3: Cost allocation methods 73
NICOLAS CURIEN
Part II: Basic theory 103
Chapter 4: Cost recovery and short-run efficiency 105
CLAUDE CRAMPES
Chapter 5: Cost recovery and the efficient development of the grid 137
RICHARD GREEN
vi Transport pricing of electricity networks
Chapter 6: Tariffs and Imperfect Competition 155
ANNE PERROT
Part III: Implementation issues 173
Chapter 7: Guidelines on tariff setting 175
IGNACIO J. PEREZ-ARRIAGA AND YVES SMEERS
Chapter 8: Features of transmission tariffs in Europe 205
JEAN-MICHEL GLACHANT
Acknowledgements 225
Index 227
List of Figures
Figure 1-1. Uniform pricing discrimination 17
Figure 1-2. Perfect discrimination 17
Figure 1-3. Imperfect, third order discrimination 19
Figure 1-4. Two-part tariff discrimination 20
Figure 1-5. N on discrimination for a meshed network 24
Figure 2-1. Interconnection pricing example 38
Figure 2-2. Universal service funding example 41
Figure 2-3. Economies of scales 53
Figure 2-4. Fully distributed costs 61
Figure 3-1. From Shapley to Aumann 82
Figure 3-2. Supportability and non-supportability 85
Figure 4-1. One line network 110
Figure 4-2. Three-line network 110
Figure 4-3. Out-of-merit-order optimal dispatch 112
Figure 4-4. No capacity constraint, same valuation at both nodes 124
Figure 4-5. Binding transport capacity, nodal marginal valuations
of energy diverge 124
Figure 4-6. Optimal allocation with energy losses 125
Figure 5-1. Willingness to pay for transmission capacity in a two-
node network 139
Figure 5-2. Optimal level of transmission in a loss-less network 140
Figure 5-3. A detrimental grid expansion 151
Figure 8-1. Comparison of EHV and HV tariffs for the same type of
consumer 213
Figure 8-2. Comparison of three types of consumer: A, B, and C 215
Figure 8-3. Tariff comparison for three types of consumer 216
List of Tables
Table 8-1. Cost components of transmission tariffs 207
Table 8-2. Main characteristics of the transmission pricing
principles in Europe 209
Table 8-3. Split of charges paid by generators and consumers 211
Table 8-4. Breakdown of tariff 'B' for EHV grid 212
Table 8-5. Correlation analysis 219
Table 8-6. Accounting procedures 220
Table 8-7. Cost of network assets 220
Table 8-8. Structure of transmission charges 221
Table 8-9. Transmission tariff levels 222
Table 8-10. Electricity distribution tariffs: medium voltage network 223
Contributing Authors
Jose Ignacio Perez-Arriaga, professor of electric engineering
Instituto de Investigacion Tecnologica (IIT), Universidad Pontificia
Comillas
Alberto Aguilera 23,28015 Madrid, Spain
Tel.: [phone] -Fax: [phone]-
[email protected]
Born in Madrid, Spain (1948). Electrical Engineer from Comillas
University, PhD and Master of Science in Electrical Engineering from the
Massachusetts Institute of Technology (MIT). Founder and Director (1984-
1995) of the Institute of Technological Research (IIT) at Comillas
University, where he is a professor at the Engineering School and has also
been Vice-rector for Research. Commissioner at the Spanish Energy
Regulatory Commission (1995-2000). Member of the Spanish Academy of
Engineering. Jose Ignacio Perez-Arriaga has lectured and consulted for
companies and institutions in more than 20 countries. Current areas of
interest: operation, control, planning and regulation of electric power
systems.
Claude Crampes, professor of economics
Universite de Toulouse, IDEI and Gremaq
Manufacture des Tabacs, 21, allee de Brienne, Bat. F., 31000 Toulouse,
France
Tel: [phone] -Fax: [phone] [email protected]
xu Transport pricing of electricity networks
Claude Crampes is professor of economics at the Universite des Sciences
Sociales de Toulouse and research director at the Institut D'Economie
Industrielle (IDEI). He is a specialist of Industrial Organisation, with a
special interest in the Economics of Networks and the Economics of Energy.
His research results are published in Annales d'Economie et de
Statistique, Annales des Telecommunications, Economica, European
Economic Review, International Journal ofI ndustrial Organization, Journal
of Consumer Policy, Journal of Regulatory Economics, Rand Journal of
Economics, Revue Economique, Revue Internationale de Droit Economique,
Revista Espanola de Economia, Utilities Policy.
Nicolas Curien, professor of economics
CNAM, Departement Economie et gestion
2 rue Conte, 75003 Paris, France
Tel.: [phone] [email protected]
Nicolas Curien is professor of economics at the Conservatoire national
des arts et metiers, in Paris. He also teaches at the Ecole Poly technique. His
research and teaching interests are in the fields of market organisation and
regulation in network industries, especially as concerns
telecommunications. During the past twenty years, he has published several
books and a number of academic papers on networks economics. He is a
member of the French Academy of Technologies and a member of the
French High Commission for the Postal and Telecommunications public
Utilities (CSSPPT).
Jean-Michel Glachant, professor of economics
Universite de Paris XI, Centre de recherche ADIS
54 bd Desgranges, Sceaux 92331 Cedex, France
Tel: [phone] - Fax: +33 I 4543 39 89 -
[email protected]
Jean-Michel Glachant is pennanent professor and Head of the
Department of Economics at the University of Paris XI, as well as head of
the "Electricity Group Jean Monnet" at the ADIS research center. He
recently edited "Competition in European Electricity Markets: A Cross
Country Comparison" (Edward Elgar, 2003), "The Economics of
Contracts. Theory and Applications" (Cambridge University Press, 2002),
"Les reformes de l'industrie electrique en Europe" (Commissariat General
du Plan, France, 2000). He took part in the research "Indicators ofI nternal