at the Meter: Lessons
From the U.K.Metering lies at the heart of electric competition, but may work best as a "natural" monopoly controlled by the distribution utility....
and transmission systems as a unit, recognizing inherent tradeoffs of losses, congestion, and reliability, and so on. That objective may not work as well for market-driven pools.
A key to transmission planning lies in "flow forecasting." The term is somewhat analogous to load forecasting but inherently more difficult to achieve because of the highly nonlinear relationship between properties of the transmission system as it interacts with various combinations of siting and dispatch of generation and load modification resources, as well as wheeling requests.
One possible solution might come from encouraging market players to supply some minimum amount of advance information for longer-term overall system planning. For example, those players not choosing to collaborate might be assessed (higher) transmission charges. Such differentiated pricing is technically feasible and only awaits regulatory sanction. There should be no significant technical problems in tracking transmission cost-causers in a world of market-driven pools. However, the task could prove somewhat more difficult with bilateral contracts.
Any seller(s) and buyer(s) can pair up and strike their own power deal, whether at wholesale or retail. Depending on the number of parties and their characteristics, these bilateral contracts may create more technical difficulty than market-driven pooling, because overall system-use patterns and hence forecasted flows for transmission planning could become even less predictable (em especially in the long term. Why? Confidentiality plays a part, of course. But bilateral contracts may also increase uncertainty for suppliers (em and end users (em who may delay decisions as long as possible in hope of getting a better deal, further frustrating joint efforts in advance planning.
Technological advances may have shrunk the optimal size of new generating units, but transmission's economy-of-scale benefits have endured and will likely persist. In fact, as bottlenecks continue to appear, it may become desirable (valuable) to build reserve transmission capability into new installations whenever possible. Hence, if bilateral contracts become predominant (em instead of wholly market-based pools (em traders may need to work together to encourage joint system planning for generation, load modification, and transmission.
For example, overall transmission system capabilities could be periodically "trued-up" by updating the potential needs of market participants any time a significant new power source prompts system expansion. Thus, if some existing power sources were already aware they were subject to congestion charges or foregone opportunities, such constraints could be at least partially relaxed to their benefit by allowing pro-rata contributions to construction costs if new transmission facilities also help cost-effectively relax known bottlenecks. Of course, adopting this sort of process also could help accelerate construction in general, by reducing incremental charges for new power sources that actually precipitate transmission expansion.
Continuing "transparency" would also help. For example, the system "administrator" could commission and make available certain generic types of transmission planning documents intended to target a variety of broad categories of potential usage. These documents could include a plan to adequately serve new cycling generation in an urban area, or one to handle base-load wheeling throughout the system. With reference to these sorts of plans on file, and by comparing time and costs of