Transmission charging and market distortion

Andy Philpott
University of Auckland

The New Zealand Electricity Authority is considering a number of transmission charging proposals. Ideally such charges should not alter incentives in the spot market, but maximum-demand charges have led to some electricity purchasers avoiding charges by shifting load. Flow-based charges discourage such behaviour but distort short-run behaviour in different ways. We discuss the advantages and disadvantages of peak transmission charges and flow-based transmission charges and describe a model that might be used to find the best combination of these. (joint work with K. Ruddell and A. Downward)

Presentation (PDF File)

Back to Optimization and Equilibrium in Energy Economics