Cost Recovery and the Efficient Development of the Grid

  • Richard Green


This chapter studies the inter-relationship between transmission pricing and investment in the grid. As with any good or service, if prices are low, demand will be high. In the case of electricity, this means that if the charges for using the transmission system are too low, generators and loads will be sited too far apart, and the amount of electricity that users wish to transmit between them will be high. The transmission planner will have the uncomfortable choice between investing in the system to facilitate these wishes, or operating a system that is too small in relation to the demands placed upon it, with the consequent implications for congestion and transmission losses.


Marginal Cost Electricity Network Transmission Capacity Cost Recovery Spot Price 
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. Bushneil, J.B. and S.E. Stoft (1996) “Electric Grid Investment under a Contract Network Regime”, Journal of Regulatory Economics, vol 10, no 1, July, pp 61–79.CrossRefGoogle Scholar
  2. Hogan, W.W. (1992) “Contract Networks for Electric Power Transmission”, Journal of Regulatory Economics, vol 4, no 2, September, pp 211–242.CrossRefGoogle Scholar
  3. Oum, T.H. and Y. Zhang (1990) “Airport Pricing: Congestion Tolls, Lumpy Investment and Cost Recovery”, Journal of Public Economics, vol 43, no 3, pp 353–74.CrossRefGoogle Scholar
  4. 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
  5. Turvey, R. (2000) “Infrastructure Access Pricing and Lumpy Investments”, Utilities Policy, vol 9, no 4, pp 207–218.CrossRefGoogle Scholar
  6. Wu, F., P. Varaiya, P. Spiller and S. Oren (1996) “Folk Theorems on Transmission Access: Proofs and Counterexamples”, Journal of Regulatory Economics, vol 10, no 1, July, pp 5–23.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2003

Authors and Affiliations

  • Richard Green
    • 1
  1. 1.University of Hull Business SchoolUK

Personalised recommendations