Economists often seem enamored of economic efficiency, honoring its merits while decrying the lost benefits of inefficient outcomes. But really ... what's the harm in a little inefficiency? Well,...
none are needed. Yet others see the opposite problem: Transmission owners who receive FTRs with high rebate values might conspire against transmission improvements that would relieve constraints.
At Old Dominion Electric Co-op., J. Bertram Solomon says LMP would produce "and" pricing for transmission. "Even though there is a netting of overcharges through rebates, we're concerned that the scheme would allow the regional transmission owners to extract monopoly prices. There is a mismatch between how the FTRs are allocated [individual noncoincident peaks] and how the rebates are allocated [hourly]. ODEC would be put in the worst possible situation. [We] would get no FTRs and would have to pay two pancaked transmission charges to get access to PJM."
Kathy Patton, of Electric Clearinghouse, gets the last word on how the PJM plan would bundle energy and transmission prices, forcing traders to play one against the other:
I can't buy or sell power into or out of PJM. I must reserve my transmission by 10 a.m., but I don't make my energy bid until 12 noon. So, if my bid doesn't succeed, I'm hung out on transmission.
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