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

Author

Listed:
  • Espinosa, Rubi
  • Rosellon, Juan

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.

Suggested Citation

  • Espinosa, Rubi & Rosellon, Juan, 2017. "Optimal Transmission Tariff Regulation for the Southern Baja-Californian Electricity Network System," MPRA Paper 98092, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:98092
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    File URL: https://mpra.ub.uni-muenchen.de/98092/1/MPRA_paper_98083.pdf
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    References listed on IDEAS

    as
    1. Egerer, Jonas & Rosellón, Juan & Schill, Wolf-Peter, 2015. "Power System Transformation toward Renewables: An Evaluation of Regulatory Approaches for Network Expansion," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 36(4), pages 105-128.
    2. Juan Rosellón & Hannes Weigt, 2011. "A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks: Theory, Modeling, and Application," The Energy Journal, , vol. 32(1), pages 119-148, January.
    3. Thomas-Olivier Leautier, 2000. "Regulation of an Electric Power Transmission Company," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 61-92.
    4. Thomas-Olivier Léautier & Véronique Thelen, 2009. "Optimal expansion of the power transmission grid: why not?," Journal of Regulatory Economics, Springer, vol. 36(2), pages 127-153, October.
    5. Makoto Tanaka, 2007. "Extended Price Cap Mechanism for Efficient Transmission Expansion under Nodal Pricing," Networks and Spatial Economics, Springer, vol. 7(3), pages 257-275, September.
    6. Vogelsang, Ingo, 2001. "Price Regulation for Independent Transmission Companies," Journal of Regulatory Economics, Springer, vol. 20(2), pages 141-165, September.
    7. William Hogan & Juan Rosellón & Ingo Vogelsang, 2010. "Toward a combined merchant-regulatory mechanism for electricity transmission expansion," Journal of Regulatory Economics, Springer, vol. 38(2), pages 113-143, October.
    8. Thomas-Olivier Léautier & Véronique Thelen, 2009. "Optimal expansion of the power transmission grid: why not?," Post-Print hal-02402972, HAL.
    9. Kristiansen, T. & Rosellón, J., 2010. "Merchant electricity transmission expansion: A European case study," Energy, Elsevier, vol. 35(10), pages 4107-4115.
    10. Tarjei Kristiansen & Juan Rosellón, 2006. "A Merchant Mechanism for Electricity Transmission Expansion," Journal of Regulatory Economics, Springer, vol. 29(2), pages 167-193, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Zenón, Eric & Rosellón, Juan, 2017. "Optimal transmission planning under the Mexican new electricity market," Energy Policy, Elsevier, vol. 104(C), pages 349-360.
    2. Kapitonov, Ivan A. & Patapas, Aleksandras, 2021. "Principles regulation of electricity tariffs for the integrated generation of traditional and alternative energy sources," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    Financial transmission rights; nodal prices; congestion management; electricity; Mexico.;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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