Incentives for transmission investment in the PJM electricity market: FTRs or regulation (or both?)
Juan Rosellon (),
Zdenka Myslíková and
Utilities Policy, 2011, vol. 19, issue 1, 3-13
This paper presents an application of a mechanism that provides incentives to promote transmission network expansion in the area of the US electric system known as PJM. The applied mechanism combines the merchant and regulatory approaches to attract investment into transmission grids. It is based on rebalancing a two-part tariff in the framework of a wholesale electricity market with locational pricing. The expansion of the network is carried out through the sale of financial transmission rights for the congested lines. The mechanism is tested for 14-node and 17-node geographical coverage areas of PJM. Under Laspeyres weights, it is shown that prices converge to the marginal cost of generation, the congestion rent decreases, and the total social welfare increases. The mechanism is shown to adjust prices effectively given either non-peak or peak demand.
Keywords: Electricity; transmission; expansion; Incentive; regulation; PJM (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Incentives for Transmission Investment in the PJM Electricity Market: FTRs or Regulation (or Both?) (2010)
Working Paper: Incentives for Transmission Investment in the PJM Electricity Market: FTRs or Regulation (or both?) (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:19:y:2011:i:1:p:3-13
Access Statistics for this article
Utilities Policy is currently edited by D. Smith
More articles in Utilities Policy from Elsevier
Bibliographic data for series maintained by Haili He ().