 Reactive Power is a Cheap ConstraintEdward Kahn and Ross Baldick The Energy Journal, 1994, vol. 15, issue 4, 191-201 Abstract: Hogan (1993) has proposed a version of marginal cost pricing for electricity transmission transactions that include a component for reactive power to support voltage at demand nodes. His examples support the notion that the cost of satisfying voltage constraints can be quite high. We show that in his simplest example the price on this constraint results from an uneconomic and artificial characterization of the problem, namely an inefficient and unnecessarily constrained dispatch. By eliminating this characterization, the price of reactive power falls to a very modest level. Our counterexample has implications for the institutional arrangements under which transmission pricing reform will take place. We believe that environment will be an open access competitive setting, where dispatch is still controlled by one group of participants. Manipulation of marginal transmission costs becomes quite feasible in complex networks through subtle changes to dispatch. Therefore an open access regime using marginal cost pricing must involve either some kind of monitoring and audit function to detect potential abuses, or alternatively, institutionalrestructuring to eliminate conflicts of interest. Keywords: Reactive power; market power; Electricity transmission pricing; Electricity prices (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:15:y:1994:i:4:p:191-201 DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No4-9 Access Statistics for this article More articles in The Energy Journal |
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