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A Primer on Transmission Benefits and Cost Allocation

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  • William W. Hogan

Abstract

The cost of transmission facilities must be allocated to those within the transmission planning region that benefit from those facilities in a manner that is at least roughly commensurate with estimated benefits." (FERC, 2010, p. 91) Benefits include reliability, economic and public policy related impacts. Turning the principle into a workable policy is important as a support for restructured electricity markets. A challenge is to make the different measures of benefits commensurable, and to find approximations that honor the principle without imposing a standard of perfection. A framework for such cost allocation uses examples from existing models and transmission investment studies to describe how the cost allocation principle could apply within the limits of available analytical capabilities.

Suggested Citation

  • William W. Hogan, 2018. "A Primer on Transmission Benefits and Cost Allocation," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    • Handle: RePEc:aen:eeepjl:eeep7-1-hogan
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    Cited by:

    1. E. Ruben van Beesten & Ole Kristian r{A}dnanes & Hr{a}kon Morken Linde & Paolo Pisciella & Asgeir Tomasgard, 2022. "Welfare compensation in international transmission expansion planning under uncertainty," Papers 2205.05978, arXiv.org.
    2. Ingo Vogelsang, 2018. "Can Simple Regulatory Mechanisms Realistically be used for Electricity Transmission Investment? The Case of H-R-G-V," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    3. Deniz Sun & Luis Olmos & Michel Rivier, 2020. "Considering Local Air Pollution in the Benefit Assessment and Cost Allocation of Cross Border Transmission Projects," Energies, MDPI, vol. 13(6), pages 1-20, March.
    4. Savelli, Iacopo & De Paola, Antonio & Li, Furong, 2020. "Ex-ante dynamic network tariffs for transmission cost recovery," Applied Energy, Elsevier, vol. 258(C).

    More about this item

    JEL classification:

    • F0 - International Economics - - General

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