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Transmission pricing in privately-owned electricity grids: An illustration from the Argentine electricity pool

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  • Abdala, Manuel A.

Abstract

The Argentine electricity reform of 1992 offers an interesting example of decentralized transmission pricing arrangements within a competitive system. This paper is a shortened version of an original analysis made in 1994 of the regulation of the Argentine transmission system, with emphasis on investment cost allocation rules. To make up for the limitation of short-run marginal cost (SRMC) pricing, incentives on service quality were put in place, including penalties for lack of line availability. The mechanism for capacity expansion, based on ad-hoc rules for allocations of investment costs, had the potential to produce non-optimal investment outcomes, as such rules ignored beneficiaries on the demand side. For fine tuning of this system, I proposed an alternative rule based on traditional welfare analysis that broadens the universe of identified beneficiaries, and thus can be expected to produce a fairer outcome on investment cost allocation, reducing the potential risks of non-optimal investment. A brief postscript comments on the paper from the perspective of 2007.

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  • Abdala, Manuel A., 2008. "Transmission pricing in privately-owned electricity grids: An illustration from the Argentine electricity pool," Energy Economics, Elsevier, vol. 30(4), pages 1284-1305, July.
    • Handle: RePEc:eee:eneeco:v:30:y:2008:i:4:p:1284-1305
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    References listed on IDEAS

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    1. Einhorn, Michael A, 1990. "Electricity Wheeling and Incentive Regulation," Journal of Regulatory Economics, Springer, vol. 2(2), pages 173-189, June.
    2. Joskow, Paul L., 1993. "Electricity agenda items for the new FERC," The Electricity Journal, Elsevier, vol. 6(5), pages 18-28, June.
    3. Teplitz-Sembitzky, W., 1992. "Electricity Pricing : Conventional Views and New Concepts," Papers 52, World Bank - Industry and Energy Department.
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    Cited by:

    1. Correa-Giraldo, Manuel & Garcia-Rendon, John J. & Perez, Alex, 2021. "Strategic behaviors and transfer of wholesale costs to retail prices in the electricity market: Evidence from Colombia," Energy Economics, Elsevier, vol. 99(C).
    2. Littlechild, Stephen C. & Skerk, Carlos J., 2008. "Transmission expansion in Argentina 3: The evolution of policy," Energy Economics, Elsevier, vol. 30(4), pages 1420-1461, July.
    3. Littlechild, Stephen C. & Ponzano, Eduardo A., 2008. "Transmission expansion in Argentina 5: The regional electricity forum of Buenos Aires province," Energy Economics, Elsevier, vol. 30(4), pages 1491-1526, July.
    4. He, Y.X. & Zhu, M.Z. & Xiong, W. & Zhang, T. & Ge, X.L., 2012. "Electricity transmission tariffs for large-scale wind power consumption in western Gansu province, China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4543-4550.
    5. Littlechild, Stephen C. & Skerk, Carlos J., 2008. "Transmission expansion in Argentina 1: The origins of policy," Energy Economics, Elsevier, vol. 30(4), pages 1367-1384, July.
    6. Littlechild, Stephen C. & Skerk, Carlos J., 2008. "Transmission expansion in Argentina 2: The Fourth Line revisited," Energy Economics, Elsevier, vol. 30(4), pages 1385-1419, July.
    7. Abdala, Manuel A., 2008. "Governance of competitive transmission investment in weak institutional systems," Energy Economics, Elsevier, vol. 30(4), pages 1306-1320, July.

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