Reliability Differentiation of Electricity Transmission

Chi-Keung Woo, Ira Horowitz and Jennifer Martin

Journal of Regulatory Economics, 1998, vol. 13, issue 3, 277-92

Abstract: In many jurisdictions, electric utility restructuring has included the creation of an independent system operator (ISO) to dispatch generation, establish the market-clearing price, and allocate limited transmission capacity among users. This paper differentiates reliability through rate unbundling. We propose a capacity reservation tariff (CRT) to induce the users to self-select their preferred levels of reliability. Based on these self-selected reliability levels, the ISO can efficiently allocate limited transmission capacity. Our proposed CRT can be a practical solution to the transmission congestion problem faced by the California ISO in the implementation of retail access. Copyright 1998 by Kluwer Academic Publishers

Date: 1998
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