Nodal pricing of electricity: how much does it cost to get it wrong?

Richard John Green ()

Journal of Regulatory Economics, 2007, vol. 31, issue 2, pages 125-149

Abstract: Economists know how to calculate optimal prices for electricity transmission. These are rarely applied in practice. This paper develops a 13-node model of the transmission system in England and Wales, incorporating losses and transmission constraints. It is solved with optimal prices, and with uniform prices for demand and for generation, re-dispatching when needed to take account of transmission constraints. Moving from uniform prices to optimal nodal prices could raise welfare by 1.3% of the generators’ revenues, and would be less vulnerable to market power. It would also send better investment signals, but create politically sensitive regional gains and losses. Copyright Springer Science+Business Media, LLC 2007

Keywords: Electricity transmission pricing; Welfare losses; Market power; L94 (search for similar items in EconPapers)
Date: 2007
View list of references View citations in EconPapers

Downloads: (external link)
http://hdl.handle.net/10.1007/s11149-006-9019-3 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:kap:regeco:v:31:y:2007:i:2:p:125-149

Access Statistics for this article

Journal of Regulatory Economics is edited by Michael A. Crew

More articles in Journal of Regulatory Economics from Springer
Series data maintained by Christopher F. Baum ().