The Diversity of Design of TSOs

Vincent Rious, Jean-Michel Glachant (), Yannick Perez () and Philippe Dessante

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: It is puzzling today to explain diversity and imperfection of actual transmission monopoly designs in competitive electricity markets. We argue that transmission monopoly in competitive electricity markets has to be analysed within a Wilson (2002) modular framework. Applied to the management of electricity flows, at least three modules make the core of transmission design: 1° the short run management of network externalities; 2° the long run management of network investment; and 3° the coordination of neighboring Transmission System Operators for cross border trade. In order to tackle this diversity of designs of TSOs, we show that for each of these modules, three different basic ways of managing them are possible. Among the identified twenty seven options of organisation, we define an Ideal TSO. Second, we demonstrate that 1°monopoly design differs from this Ideal TSO and cannot handle these three modules irrespective of the “institutional” definition and allocation of property rights on transmission; while 2°definition and allocation of property rights on transmission cannot ignore the existing electrical industry and transmission network structure: they have to complement each other to be efficient. Some conclusions for regulatory issues of transmission systems operators are derived from this analysis of network monopoly organisation.

Keywords: design of TSOs; management of power flows; governance structure of transmission. (search for similar items in EconPapers)
JEL-codes: D61 D62 L29 L33 L5 (search for similar items in EconPapers)
Pages: 24
Date: 2008-04
New Economics Papers: this item is included in nep-ene
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Citations: View citations in EconPapers (23)

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Related works:
Journal Article: The diversity of design of TSOs (2008)
Working Paper: The diversity of design of TSOs (2008)
Working Paper: The diversity of design of TSOs (2008)
Working Paper: The diversity of design of TSOs (2008)
Working Paper: The Diversity of Design of TSOs (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0822

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