Transmission capacity reservations implemented through a spot market with transmission congestion contracts

Journal Article · Fri Nov 01 04:00:00 EST 1996 · Electricity Journal

DOI:https://doi.org/10.1016/S1040-6190(96)80457-X· OSTI ID:508424

Harvey, S M; Hogan, W W; Pope, S L

The capacity reservation open access transmission tariff proposed by the FERC is entirely compatible with a competitive bulk power market. Using a point-to-point reservation approach that does not depend on tracking actual flows, capacity rights trading could be coordinated through the system operator. The capacity reservations would be fully tradeable and would fully support the competitive market. Open access to the transmission grid is a necessary support of a competitive market in electricity generation and supply. A key ingredient of open access is a system of capacity allocations for use of the transmission grid. A unique characteristic of electricity transmission is seen in the difficulty of defining transmission rights and matching these rights in a meaningful way to the actual use of the system. The old procedures from the era of vertically integrated utilities will not suffice for the new world of unbundling and competition. Strong network interactions coupled with user flexibility and choice require a new system of transmission capacity definition, reservation and use. The Federal Energy Regulatory Commission has described a system of point-to-point transmission capacity reservations under the Capacity Reservation Open Access Transmission Tariffs (CRT) proposal. The issues addressed under the proposed CRT are important. In the long run, the CRT could be more important than Order 888, and it offers the key ingredients for the future of a competitive electricity market. However, the FERC faces a significant challenge in developing and explaining the CRT ideas. The CRT proposal has been widely read as a narrow, literal prescription requiring seemingly impossible explicit, decentralized trading of physical transmission rights whose ownership and configuration would have to be rearranged constantly to match the dynamic use of the electric system. Viewed from this narrow perspective, the CRT would present, a host of practical difficulties.

• OSTI ID: 508424
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 9 Vol. 9; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
MANAGEMENT
POWER TRANSMISSION
PRICING REGULATIONS
SPOT MARKET