Optimal Transmission Tariff Regulation for the Southern Baja-Californian Electricity Network System

Rubi Espinosa and Juan Rosellon

MPRA Paper from University Library of Munich, Germany

Abstract: The tariff imposed over the use of electricity transmission networks is one critical factor to achieve efficiency in electricity markets. In Mexico, the current transmission network tariffs are based on long run marginal costs. We propose an incentive price-cap mechanism and apply it to the meshed network system in the isolated electricity system of Southern Baja California, Mexico. We further compare the current transmission tariffs set by the Mexican regulator (CRE) with the tariffs resulting from our regulatory scheme. We show that our mechanism prices the network at tariffs rendering superior welfare compared to the tariffs determined by Mexican authorities.

Keywords: Financial transmission rights; nodal prices; congestion management; electricity; Mexico. (search for similar items in EconPapers)
JEL-codes: L51 L94 Q40 Q48 Q5 R4 (search for similar items in EconPapers)
Date: 2017-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Investigación Económica 301.LXXVI(2017): pp. 3-56

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:98092

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