Dominion Resources touts its "impacted" method, but opponents call it a "stalking horse" (em a scheme to avoid full review at FERC.
Is the Federal Energy Regulatory Commission prepared to accept true marginal-cost pricing for electric transmission?
With all the criticism leveled at the traditional "contract path," one would think that the FERC would consider a new approach to transmission pricing.
In fact, last year in its final Order No. 888, the Commission recognized the possible advantages of marginal cost methods, which would set prices based upon actual flows in the transmission grid:
[S]ome versions of flow-based pricing could more accurately reflect and price the actual power flows on transmission systems and thus could produce efficiency gains, better generating siting decisions, and benefits for customers and utilities alike. %n1%n
Nevertheless, the FERC still has proved to be extremely wary of marginal cost pricing for transmission. Its 1994 policy statement on transmission pricing puts the burden of proof squarely on those who would move away from traditional, embedded-cost pricing:
[U]nlike sales of generation, the Commission cannot rely on competitive market forces to discipline prices for firm transmission service. Accordingly, any transmission owner advocating a market-based transmission pricing method must demonstrate how it has alleviated these serious concerns. %n2%n