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The FERC edges toward opportunity-cost pricing for transmission

C.M. Studness

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Abstract

The Federal Energy Regulatory Commission (FERC) has had little trouble breaking with tradition to promote open access to transmission, but has been loathe to change its traditional transmission pricing policy. Essentially, the FERC has been promoting competition in transmission, while steadfastly adhering to cost-based pricing. Like oil and water, the two do not mix. The FERC finally seems to have recognized this and has moved toward opportunity-cost pricing for transmission services in its rehearing order for the merger between Northeast Utilities and the Public Service Company of New Hampshire.

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What this paper is about

The Federal Energy Regulatory Commission (FERC) has had little trouble breaking with tradition to promote open access to transmission, but has been loathe to change its traditional transmission pricing policy. Essentially, the FERC has been promoting competition in transmission, while steadfastly adhering to cost-based pricing. Like oil and water, the two do not mix. The FERC finally seems to have recognized this and has moved toward opportunity-cost pricing for transmission services in its rehearing order for the merger between Northeast Utilities and the Public Service Company of New Hampshire.

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Available abstract

The Federal Energy Regulatory Commission (FERC) has had little trouble breaking with tradition to promote open access to transmission, but has been loathe to change its traditional transmission pricing policy. Essentially, the FERC has been promoting competition in transmission, while steadfastly adhering to cost-based pricing. Like oil and water, the two do not mix. The FERC finally seems to have recognized this and has moved toward opportunity-cost pricing for transmission services in its rehearing order for the merger between Northeast Utilities and the Public Service Company of New Hampshire.

Key concepts: Commission, Order (exchange), Competition (biology), Opportunity cost, Business, Transmission (telecommunications), Industrial organization, Economics

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