TRANSMISSION ACCESS RIGHTS AND TARIFFS

Much of the current debate in the US surrounding the deregulation of e lectric power supply and the associated restructuring of that heretofo re vertically integrated industry has been concerned with measures to nullify or eradicate any market power based on control of access to tr ansmission by the traditional utilities. The debate has had to do with various degrees of 'unbundling' of control of the two assets (generat ion and transmission) in order to ensure that all power suppliers - va rious types of independent power producers and power marketers - have access to transmission that is as unfettered as that of the owners. Th e argument of this paper is that any assigning of transmission access 'rights' to power suppliers of any ilk is de facto a 'rebundling' of w hat it has been desired to 'unbundle.' In addition, assigning transmis sion access rights to suppliers is bound to inflate the demand for tra nsmission capacity, whether in the short or the long run, because mult iple suppliers will seek to secure access rights for prospective trans actions for which they are competing. An alternative approach is sugge sted, based on the facts that existing transmission has been provided to ensure adequate and reliable supply to existing loads, that the rel ation of transmission capacity and loads is stable (whereas the relati on of supply and loads, and hence of supply and transmission will be i ncreasingly volatile), and that transmission constraints have conventi onally been defined and monitored in terms of imports (to loads) acros s critical interfaces (cut sets). From this perspective, assigning of transmission access rights to loads (as their proportionate share of i mports across critical interfaces), and charging for such access in th e traditional mode of regulated return-on-investment tariffs would avo id almost all the difficulties hobbling the current debate. (C) 1997 E lsevier Science S.A.