Integrated approach to transmission services pricing

The paper presents an intuitively logical split between: (a) embedded, (b) operating, and (c) expansion cost based pricing and methodologies for imple mentation, for transmission services. A conceptually straightforward mechan ism for the equitable allocation of transmission network embedded cost reco very based on capacity-use and reliability benefit is proposed, expansion c ost is charged on a long-run marginal cost basis and finally, operating cos t recovery is based on short-run marginal pricing. This is followed by co-o rdinating these alternatives and integrating the pricing mechanisms to achi eve appropriate price signals for bulk power users of transmission systems.