Cost Recovery and Short-Run Efficiency

  • Claude Crampes


When designing a tariff for the transport of electricity, the main difficulty is that the transport industry apparently incurs high fixed costs and no real variable cost. In effect, when the infrastructure is installed and when the operators are at their workplace, the only input which is necessary to deliver electricity at a given withdrawal node is electricity at some injection node since electricity is flowing by itself. Consequently, at first sight the problem is just to allocate fixed costs, mainly infrastructure maintenance costs, wages and financial charges, among the different types of users of the grid.


Marginal Cost Optimal Allocation Electricity Network Transport Infrastructure Cost Recovery 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Chao, H.P. and S. Peck (1996), “A Market Mechanism for Electric Power Transmission”, Journal of Regulatory Economics, vol 10, pp 25–60.CrossRefGoogle Scholar
  2. Chao, H.P., S.Peck, S.Oren and R.Wilson (2000), “Flow-Based Transmission Rights and Congestion Management”, Electricity Journal, October, pp 38–58.Google Scholar
  3. Crampes C. and J. J. Laffont (2001) “Transport Pricing in the Electricity Industry” Oxford Review of Economie Policy, Autumn, vol 17, no 3, pp 313–328.CrossRefGoogle Scholar
  4. Cremer, H. and J. J. Laffont (2002), “Competition in Gas Markets”, European Economic Review, vol 46, no 4–5, pp 928–935.CrossRefGoogle Scholar
  5. Hogan, W.W. (1992) “Contract Networks for Electricity Power Transport”, Journal of Regulatory Economics vol 4, pp 211–242.CrossRefGoogle Scholar
  6. Hogan, W.W. (1998) “Nodes and Zones in Electricity Markets: Seeking Simplified Congestion Pricing”, in Hung-Po Chao and H.G. Huntington (Eds.) Designing Competitive Electricity Markets, Kluwer Academic Publishers, London, pp 33–62.CrossRefGoogle Scholar
  7. Hsu, M. (1997) “An Introduction to the Pricing of Electric Power Transmission”, Utilities Policy, vol 6, no 3, pp 257–270.CrossRefGoogle Scholar
  8. Joskow, P.L. and J. Tirole (2000) “Transmission Rights and Market Power on Electric Power Networks”, RAND Journal of Economics, vol 31, no 3, Autumn, pp 450–487.CrossRefGoogle Scholar
  9. Pérez-Arriaga I.J., F. J. Rubio, J. F. Puerta, J. Arceluz and J. Marin (1995) “Marginal pricing of transmission services: an analysis of cost recovery”, IEEE Transactions on Power Systems, vol 10, no 1, February, pp 546–553.CrossRefGoogle Scholar
  10. Schweppe F., M. Caramanis, R. Tabors and R. Bohn (1988) Spot pricing for electricty, Kluwer Academic Publishers.CrossRefGoogle Scholar
  11. Stoft S. (2002) Power System Economics, IEEE/Wiley.CrossRefGoogle Scholar
  12. Wu, F., P. Varaiya, P. Spiller and S. Oren (1996), “Folk Theorems on Transmission Open Access: Proofs and Counter examples”, Journal of Regulatory Economics, pp 5–23.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2003

Authors and Affiliations

  • Claude Crampes
    • 1
  1. 1.Gremaq and IdeiUniversity of ToulouseFrance

Personalised recommendations