Stop Wheeling and Start Dealing: Resolving the Transmission Dilemma

Abstract

Wheeling is an evolutionary dead-end. The basket of ad hoc arrangements called “wheeling” developed to handle a few incremental trades among integrated, regulated monopolies, not to encourage or even allow competition. The effort to extend these arrangements to allow even limited competition is producing a logical and regulatory quagmire of debates about opportunity costs, loop flow, contract paths, network transmission service, back-up energy and losses, etc. If effective and efficient competition in electricity is ever to evolve, the industry and its regulators must make an evolutionary leap from a model developed by and for monopolists to a model in which competition is the central theme, not an awkward and basically unwelcome add-on.