In this paper, we discuss major issues concerning cost of transmission transactions from an engineering point of view. We identify the components of the cost of a transmission transaction and present methodologies for evaluating them using simple examples.Recent trends in the electric power utility industry in North America and other countries have been toward increased unbundling of the services provided by the utilities. Electric power utilities need to know the actual cost of providing unbundled services in order to make correct economic decisions on the various types of services they should promote or curtail while considering their service obligations. Utilities also need to know such costs in order to make correct economic and engineering decisions on upgrading and expanding their generation, transmission and distribution facilities. Finally, utilities may use the costs of service that they provide for pricing purposes.As part of these trends, the emphasis on providing unbundled .transmission service has been increasing steadily. Therefore, the knowledge of the cost of providing transmission services has become more important than ever before. Yet evaluation of this cost is extremely complex.The United States Federal Energy Regulatory Commission (FERC) undertook the development of a white paper on transmission [l] in order to address some of the complexities surrounding transmission issues. The FERC paper deals with political and economic issues in detail but stops short of addressing most engineering issues. The paper also emphasizes the importance of knowing the cost of providing transmission services but does not propose ways of evaluating this cost.
WM 18h-2 PWRS by the IEEE Power System Engineering Committee of the IEEE Power Engineering Society for presentation at the IEEE/PES
A paper recommended and approvedMany papers from academia, industry and regulatory agencies have been published on the subject of transmission access, transmission rates and transmission costs [l-131. Some of these pa*rs deal mainly with policy issues [l-3.81. Most others address rate design for wheeling services [2.4-7,9-131. A
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