Electricity transmission cost allocation and network efficiency: Implications for Mexico's liberalized power market

James Bushnell, Alejandro Ibarra-Yunez and Nicholas Pappas

Utilities Policy, 2019, vol. 59, issue C, -

Abstract: In liberalized electricity markets, the coordination and funding of transmission infrastructure are ongoing challenges. The challenge is to establish transmission tariffs that provide signals for efficient usage of the existing network and demand for new network capacity. Mexico's liberalized electricity market exemplifies the changing responsibilities in transmission planning. Through the adoption of locational marginal pricing, the Mexican market is well positioned to capture congestion costs and motivate efficient behavior. We highlight some of the potential problems that Mexico's currently planned approach and transmission tariffs could raise for generation location incentives. A long-term transmission plan can facilitate network optimization, with generation following the lead of transmission investment instead of the other way around.

Keywords: Transmission tariffs; Network efficiency; Mexico electricity market (search for similar items in EconPapers)
JEL-codes: L11 L52 L94 Q48 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:59:y:2019:i:c:12

DOI: 10.1016/j.jup.2019.100932

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