Distribution Pricing Based on Yardstick Regulation

Lima, J.W. Marangon; Noronha, Juliana Caminha; Arango, H.; Santos, Paulo E. Steele

doi:10.1109/mper.2002.4311678

Cited by 21 publications

(12 citation statements)

References 6 publications

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“…Marangon Lima et al [17] addressed distribution tariff design in Brazil. Instead of marginal cost, these authors proposed an expansion plan-based mean incremental cost, calculated from an aggregated facilities model.…”

Section: Ltmc-based Distribution Pricingmentioning

confidence: 99%

“…This maintains the relationship between rates for the various consumer categories and tariff periods. In this case, the LTMCs are used as coefficients to recover total costs [16,17,23]. Another solution uses additive coefficients, that is, adding the same amount to all rates, thereby maintaining the absolute difference between categories and periods, keeping consumers from shifting consumption from one period to another as a result of the adjustments [22].…”

Section: Ltmc-based Distribution Pricingmentioning

confidence: 99%

See 1 more Smart Citation

Distribution pricing: theoretical principles and practical approaches

Reneses

Ortega

2014

IET Generation, Transmission & Distribution

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Section: Ltmc-based Distribution Pricingmentioning

confidence: 99%

Section: Ltmc-based Distribution Pricingmentioning

confidence: 99%

Distribution pricing: theoretical principles and practical approaches

Reneses

Ortega

2014

IET Generation, Transmission & Distribution

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“…Independently of the selected regulatory scheme, the distribution access pricing is a fundamental issue for the regulator [6]. Tariff design procedure should be sufficiently transparent to guarantee the allocation of all costs with reasonable profit for the monopolist and a nondiscriminatory access for all agents of the market.…”

mentioning

confidence: 99%

“…A large number of cost allocation methods applied to remunerate transmission networks are described in the literature [3]. The direct application of transmission-pricing methods to the case of large distribution networks has several limitations and does not seem reasonable due the complexity to keep a record of all assets of distribution utilities and to identify the impact of each distribution consumer, among others [6]. The roll-in-embedded methods, also referred to as postage stamp methods, are the most common and simple, using uniform average costs, but lack of proper incentives to efficiency [23].…”

mentioning

confidence: 99%

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Uniform Marginal Pricing for the Remuneration of Distribution Networks

Jesús

Leao

Yusta

et al. 2005

IEEE Trans. Power Syst.

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A new method for distribution access via uniform pricing for the remuneration of distribution networks is presented. The proposed approach merges in a unified framework the investments, the optimal network operation requirements, the effect of the price elasticity of demand, and the application of hourly pricing for demand side management purposes. Hourly uniform marginal prices-understood as tariffs of use of the network-are obtained from maximum social welfare condition sending efficient signals to the utility and consumers, related to the optimal operation of the grid and use of the energy at peak and valley hours. This method is used in the context of a Performance Based Ratemaking regulation to get model companies from operational optimized real networks. Capital fees are integrated in the marginal tariff of use, by means of the New Replacement Value concept, broadly used in yardstick competition. The model is stated as a mixed-integer linear optimization problem suitable to be solved through well-known linear programming tools. The methodology has been successfully tested in a 42-bus test distribution network. Index Terms-Distribution access pricing, power system economics, tariffs of use, yardstick competition. I. INTRODUCTION T HE REGULATION of the electrical distribution activity based in the traditional paradigm of the Cost of Service/Rate of Return relation (CoS/RoR) engrosses or merges two distinct activities in the distribution function: distribution and retailing. The distribution utility is considered as a natural monopoly and end-user tariffs designs are usually based on the independent application of capacity and energy charges to deal with well-known revenue reconciliation problem [1]. Other types of regulation such as performance based ratemaking (PBR), have been applied in order to incentive distribution companies to be more efficient [2]. The distribution network activity remains considered as a natural monopoly and the retailing activity is open to the market. Different regulation schemes for distribution utilities as price caps, revenue caps, and yardstick competition have been developed and applied Manuscript

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Forward-looking distribution network charges considering lumpy investments

et al. 2021

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Many regulators are pushing for more cost-reflective distribution network charges to inform end users of the grid infrastructure costs their behavior causes. Since future investment costs can be avoided by reducing simultaneous peak loads, forward-looking, coincident peak charges are often proposed. Under the assumption of convex network costs, it has been shown that optimal charges signal long-run marginal network costs, triggering an optimal trade-off between network expansion and peak load reduction. In practice, however, network investments are lumpy, requiring engineering methods to estimate ill-defined marginal costs based on long-term peak demand forecasts. In this paper, we derive the optimal forward-looking network charge set by a social welfare maximizing regulator, endogenously considering investment lumpiness and uncertain consumer demand. While the optimal tariff still equals marginal network costs in essence, it now depends on a multitude of network-and demand-related parameters. Our results demonstrate that forward-looking network charges require accurate information on willingness to pay for peak demand, which currently is typically unknown to regulators.

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Distribution Pricing Based on Yardstick Regulation

Cited by 21 publications

References 6 publications

Distribution pricing: theoretical principles and practical approaches

Distribution pricing: theoretical principles and practical approaches

Uniform Marginal Pricing for the Remuneration of Distribution Networks

Forward-looking distribution network charges considering lumpy investments

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