Publications

    Brown, Ashley, and Susan Kaplan. “Retail and Wholesale Transmission Pricing: A Troublesome Divergence.” In, 1999.Abstract

    The difference between the pricing of transmission services for retail customers and the
    pricing for wholesale customers could hardly be more striking.. Retail customers still pay
    for transmission in exactly the same way that they have done for generations, namely through bundled retail rates. There are no unbundled retail transmission tariffs as such. Rates are based on the classic, time-honored methodology of cost of service regulation, namely capital investment minus depreciation times rate of return, plus expenses. The rate is then adjusted to account for customer class differences.

    With one or two possible exceptions related to future transmission services, wholesale
    customers generally pay, or at least have the option to choose to pay, an unbundled,
    transmission-specific rate and then choose their supplier from the marketplace. The
    transmission price will at least reflect the discrete costs of providing transmission-specific
    services or, depending on the pricing system employed in the locality the service is being
    rendered, may well be reflective of all costs actually being incurred on the system, including
    congestion costs. In short, transmission-specific price signals are, with a few possible
    exceptions, given solely to wholesale customers. They are not conveyed to retail customers
    either directly or indirectly.