The main driver of the European Union’s Internal Energy Market is the coordination of technical and economic operations, and planning the expansion of the system of national markets and systems. That in the US is the definition of a Standard Market Design that has been adopted by several regional transmission organisations (RTOs) in the country […]
Author Archives: Daniela Bernardo
Who should pay for use of the transmission grid?
Under both traditional cost of service and incentive regulation, the annual revenues that the regulated transmission company is allowed are established by the regulator. These revenues are paid for by network users in the form of transmission grid tariffs or charges. But how to allocate the allowed revenues among network users in ways that further […]
Liberalising the distribution network
When utilities are regulated as vertically integrated monopolies that generate, transmit, distribute and sell power to consumers in their franchise area, these activities are not separated and often the cost items associated with different types of activity are not clearly distinguished. Therefore, the rate charged covers all the utility’s costs as a whole. After restructuring […]
Investment and Operating Costs
Let us consider that total costs are the result of adding investment cost Ic (in per kw and annualized terms) and the variable cost Vc (€/kWh) times the number of hours the plant produces. This way, for each technology, the total production cost during one year, as a function of the number of hours the […]
Why is regulation necessary?
Regulation should aim to steer an industry’s performance towards improving ‘general welfare’, i.e. the collective benefit gained by consumers and operators. An industry’s performance can be measured in terms of: Consumer surplus Service availability Profitability and affordability The range of services offered The quality and degree of innovation Consumer Protection Regulation seeks to protect consumers from […]
Four key dimensions of security of electricity supply
The physical supply of electricity to end consumers is the result of a complex and interlinked set of actions, some of which were completed many years in advance. As a result of these actions, technologies and infrastructures are developed and installed, contracts for the supply of fuel are finalised, hydro reservoirs are suitably managed, power […]
Liberalisation of the Metering Activity
Advanced metering is making more data and detailed information available on energy consumption patterns. The development of ICT technologiesalso allows two-way communication between the consumer and the grid operator and supplier. This increased amount and quality of information is very valuable in the context of a liberalised market, as it allows the development of […]
The Many Phases of Generation
Electricity generation can be divided into different stages based on periods of time. These range from investment decisions made several years before plants are built, to real-time decisions on which the unit must respond to an immediate change in demand. The regulatory framework identifies the decision-maker for each case. This is one of the key […]
Regulatory issues for transmission and distribution grids
Transmission Grid Design The transmission grid (which operates at very high voltage) is designed to offset the deficits and surpluses between generation and demand in different areas of a country, or between neighbouring countries, and paves the way for establishing national or even international markets. This ensures that the most efficient generation is dispatched, globally […]
Regulatory Tools
Regulators may choose from a number of regulatory tools in order to achieve efficiency objectives. The most important of these approaches is the regulation of the revenue from electricity sales that each company is allowed to earn. The revenue must be sufficient to enable the utility company to cover its operating costs and make any […]