Authors: William W. Hogan
April 1, 2003
Center for Business and Government, John F. Kennedy School of Government
Transmission policy stands at the center of electricity market design. The special complexities of electric power transmission require nothing less than a paradigm shift in order to support a restructured competitive electricity market. The change in perspective is captured in the seeming oxymoron of "coordination for competition." Unlike for other commodities, successful electricity markets require new institutional infrastructure with a visible hand to support competition. Given a coordinated spot market with consistent pricing, most decisions can be left to market participants. Building on this spot market design, it is possible to create new forms of property rights and allow private responses to price incentives to drive most operating and investment decisions.
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