capital markets and the exchange rate with special reference to the dollarization debate in latin america the paper reviews the main challenges faced by policymakers in emerging market economies em in light of recent financial crises and taking into account salient factors like the existence of partial dollarization imperfect credibility weak financial systems and contagion the standard theory of optimal currency areas is discussed and criticized for omitting the above factors when these factors are taken into account an extreme foreign exchange regime like dollarization is shown to become much more attractive the paper discusses the pros and cons of dollarization and among other things shows that the lack of a lender of last resort is not necessarily a major drawback in em the paper also discusses inflation targeting it in a formal model it is shown that it could be subject to credibility problems similar to those found in exchange rate based stabilization programs

a multiyear dynamic approach for transmission expansion planning and long term marginal costs computation this paper presents a multicriteria formulation for multiyear dynamic transmission expansion planning problems this formulation considers three criteria investment costs operation costs and the expected energy not supplied the solution algorithm adopts an interactive decision making approach that starts at a nondominated solution of the problem this solution is identified transforming two of the three criteria in constraints specifying aspiration levels and using afterwards simulated annealing to deal with the integer nature of investment decisions after obtaining this first solution the decision maker can alter the aspiration levels and run the application again to obtain a new solution once an expansion plan is accepted the algorithm computes long term marginal costs reflecting both investment and operation costs these costs are more stable than short term ones and inherently address the revenue reconciliation problem well known in short term approaches the developed algorithm is tested using a case study based on the portuguese 400 220 150 kv transmission network

evaluation of three methods proposed for the computation of inter tso payments in the internal electricity market of the european union parties to the internal electricity market of the european union iem decided in 2001 to abolish the method of pancaking of transmission tariffs for cross border transactions that was originally in place instead they have agreed to implement a system whereby national transmission tariffs provide access to the entire iem this system is supplemented by a scheme of inter tso payments however conflict may arise if the compensation that a country must pay another one is not in accordance with the electrical usage that the former is making of the grid of the latter for instance inter tso compensation methods itc methods implicitly allocate the cost of any existing or new transmission line therefore the adoption of an inefficient method may be an obstacle for building some needed regional grid investments consequently one should give careful consideration to the selection of the itc method this paper analyzes both qualitatively and quantitatively the implementation of the most relevant itc methods that have been considered so far in the european debate when assessing each method from a conceptual point of view considerable attention is devoted to the critical examination of its main underlying assumptions

allocation of expansion transmission costs areas of influence method versus economical benefit method the open access to the transmission network and the methods to allocate its costs are the key point that allows free competition in deregulated electric markets all existing allocation methodologies have advantages and disadvantages that depend on their own features the power system characteristics and the price structure of the market the comparison of network cost allocation methods has been the aim of many studies in order to improve them in this paper the analytical relation between areas of influence method and a method based on the economical benefit for allocation of transmission costs is presented common points of both methodologies are discussed as well as their advantages to be applied to pay transmission network expansions it is concluded that both methodologies are equivalent only under certain conditions

allocation of transmission fixed charges an overview the application of marginal cost in pricing the transmission services has shown not effective mainly due to revenue reconciliation problems to overcome this a set of other methods derived from the mw mile rule has been suggested to allocate transmission fixed costs this paper compares such methods known as embedded cost methods in a centralized transmission network environment although these methods actually share the total cost and are very simple they are usually rejected due to the lack of a good economic reasoning the economic issue and the impact on the system expansion planning of such allocation are addressed in this paper some examples with the brazilian transmission system illustrate the results derived from this analysis

the diversity of design of tsos it is puzzling today to explain diversity and imperfection of actual transmission monopoly designs in competitive electricity markets we argue that transmission monopoly in competitive electricity markets has to be analysed within a wilson 2002 modular framework applied to the management of electricity flows at least three modules make the core of transmission design 1 the short run management of network externalities 2 the long run management of network investment and 3 the coordination of neighboring transmission system operators for cross border trade in order to tackle this diversity of designs of tsos we show that for each of these modules three different basic ways of managing them are possible among the identified twenty seven options of organisation we define an ideal tso second we demonstrate that 1 monopoly design differs from this ideal tso and cannot handle these three modules irrespective of the institutional definition and allocation of property rights on transmission while 2 definition and allocation of property rights on transmission cannot ignore the existing electrical industry and transmission network structure they have to complement each other to be efficient some conclusions for regulatory issues of transmission systems operators are derived from this analysis of network monopoly organisation

border flow rights and contracts for differences of differences models for electric transmission property rights in this paper a property rights model for electric transmission is proposed and its properties analyzed the proposed rights called border flow rights support financial hedging of transmission risk and merchant transmission expansion through associated financial rights called contracts for differences of differences these financial rights allow for forward trading of both energy and transmission by a unified exchange avoiding the bifurcation in current markets between decentralized long term energy trading and centralized long term transmission trading such long term trading can help to support the financing of both generation and transmission assets we consider incentive properties of such a right in the absence of lumpiness economies of scale and market power

congestion driven transmission expansion in competitive power markets a framework for transmission planning in a deregulated power market environment is discussed the level of congestion in the network is utilized as the driving signal for the need of network expansion a compromise between the congestion cost and the investment cost is used to determine the optimal expansion scheme the long term network expansion problem is formed as the decoupled combination of 1 the master problem minimization of investment costs subject to investment constraints and the benders cuts generated by the operational problem power pool and 2 the operational problem whose solution provides congestion details and associated multipliers a proper power pool model is developed and solved for congestion cost congestion revenue and transmission shadow prices linear programming is utilized to solve the investment subproblem while the quadratic programming technique has been used to solve the operational problem the algorithm has been developed for the complete planning process which provides the expansion schemes for the planning horizon the technique has been applied to illustrate the network planning study for a modified ieee 24 bus test system

a counterfactual analysis of the argentinian monetary transformation in 2002 a hard peg restored economic stability in argentina during the nineties but made it also vulnerable to real shocks in so far as the economy was highly dollarized a devaluation in 1998 in brasil its main partner damaged the argentinian competitiveness and resulted in a fall in export demand there was a need for a real adjustment but removing the peg would have implied large balance sheet effects and raised serious financial issues this article endeavours to learn a lesson about the aftermath of hard peg regime from the argentinian experience it is based on a dynamic macroeconomic model to assess the impact of three scenarios already suggested in the literature two hypothetical a floating regime and dollarization and one which was actually implemented in 2002 the pesification of the whole economy the simulations suggest that pesification was the only scenario with unambiguous expansionary effects

improving inter transmission compensation in eu abstract this article is intended as a roadmap to the correction of the existing shortcomings in the eu power transmission tariff system especially in the existing mechanism of inter transmission system operator tso compensation itc the relevant literature is surveyed and the essence of the issue is formulated definitions preconditions assumptions and constraints for the problem are explained the paper outlines the most simple and straightforward approach for the improvement of inter transmission compensation in the continental european synchronous area the proposals are based on the old practice of socialization of the network costs retained in almost all european countries i e the principle of charging the customers at the exit equal treatment is given to internal users and cross border users a tso is reimbursed for both internal and cross border flows from the users conjoined to its network on an equal footing with the users extracting power from the peripheral nodes the existing inequity in individual payments for power transmission is overcome and the cross border subsidy element is avoided this approach should be tested modeled and evaluated with real data for the european union of networks some key parts of the article are written in a more popular style in order to be accessible to inexpert readers as well

min max fair power flow tracing for transmission system usage cost allocation a large system perspective power flow tracing has been suggested as an approach for evaluating 1 transmission system usage tsu cost and 2 loss mw cost for generator and load entities in the system recently optimal power flow tracing methods have been proposed to explicitly model fairness constraints in the tracing framework this paper further strengthens the tracing compliant min max fair cost allocation approach the min max model proposed in this paper is robust it addresses concerns like scalability numerical stability and termination in a finite number of steps while searching the optimal solution we also propose a methodology to model discoms and gencos as coalition within min max framework case studies on an all india network of 1699 nodes and comparison with average participation and marginal participation methods bring out the better conflict resolution feature of the proposed approach a method to model hvdc lines within the marginal participation scheme is also proposed quantitative and qualitative comparison of various tsu cost allocation methods on such a large system is another noteworthy contribution of the paper

an incentive mechanism for electricity transmission expansion in mexico abstract this study proposes an incentive regulatory framework for expanding electricity transmission in mexico a two part pricing model is implemented within a combined merchant regulatory structure three cases are considered in the first a monopolist with postage stamp tariffs serves the whole country using uniform prices in the second case one firm holds a regional monopoly in each of the five electricity areas in the third a monopolist operates in all areas of the national electricity system and discriminates in the prices it charges in each of the regions this approach is described and then applied to the mexican electricity transmission network using real data the study compares all three cases in terms of profits capacity increases and network expansion the results are found to depend on two effects the economies of scale effect in which the maximum level is reached with a single network and the discriminatory effect that results when a firm can discriminate among types of consumers the economies of scale effect produces greater capacity and network expansion whereas the discriminatory effect increases profits

an aumann shapley approach to allocate transmission service cost among network users in electricity markets this work presents a new methodology for the allocation of transmission service cost among network users in energy markets the proposed method is based on an optimization game theoretic framework aumann shapley that retains the desirable properties of other existing methodologies such as the average participations factors apf and long run marginal costs lrmc the approach is shown to be computationally feasible and presents desirable characteristics in terms of economic coherence and isonomy computational results are presented for the brazilian power system and compared with those obtained by three other methodologies lrmc apf and the current method adopted in brazil

tales of two islands lessons for eu energy policy from electricity market reforms in britain and ireland abstract britain considers the energy only eu target electricity model tem wanting in delivering the trilemma of reliability sustainability and affordability and argues that a capacity auction with long term contracts for new entrants is the least cost solution compared to relying on expectations of future prices to deliver adequate generation and demand side response the energy union argues against feed in tariffs fits for renewables pressing for premium fits pfits just as gb has abandoned pfits in favour of fits this paper draws on the gb experience of electricity market reform before and after the 2015 change of government to highlight promising resolutions of the energy trilemma and the problems that have arisen between the diagnosis of the problem and the delivery of solutions it sets out the theory and practice of delivering capacity energy and quality of supply gives a brief history of gb electricity from the cegb to its current unbundled liberalized and privatized structure that sheds light on the trilemma problem and discusses possible solutions the island of ireland single electricity market reforms illustrate the problem and possible answer of how best to deliver quality of service with high intermittency

the long term impact of transmission pricing transmission pricing has been one of the major issues on the ongoing debate about deregulation and privatization many papers have dealt with the static nature of the tariff using the incremental and the embedded cost approaches however few of them have focused on the dynamic aspects of the tariff and therefore on its impact on the long term expansion planning of both generation and transmission the main target of this paper is to address some interesting topics about the effect of the transmission pricing methods on system cost in this new environment where generation is treated as an open market and transmission as a monopoly some examples with the brazilian power system illustrate the main points shown in this paper

allocation of fixed costs in distribution networks with distributed generation in this paper we propose a method for the allocation of fixed capital and nonvariable operation and maintenance costs at the medium voltage mv distribution level the method is derived from the philosophy behind the widely used mw mile methodology for transmission networks that bases fixed cost allocations on the extent of use that is derived from load flows we calculate the extent of use by multiplying the total consumption or generation at a busbar by the marginal current variations or power to current distribution factors pidfs that an increment of active and reactive power consumed or generated in the case of distributed generation at each busbar produces in each circuit these pidfs are analogous to power transfer distribution factors ptdfs unlike traditional tariff designs that average fixed costs on a per kwh basis across all customers the proposed method provides more cost reflective price signals and helps eliminate possible cross subsidies that deter profitable in the case of competition or cost effective in the case of a fully regulated industry deployment of dg by directly accounting for use and location in the allocation of fixed costs an application of this method for a rural radial distribution network is presented

designing regulatory frameworks for merchant transmission investments by real options analysis in deregulated electricity markets the transmission network is a key infrastructure for enabling competition in the generation sector a deficient expansion of the transmission grid prevents the realization of the benefits in terms of efficiency associated with market mechanisms consequently it is essential to provide clear investment policies and economic signals to attract timely and efficient transmission investments in order to develop the system at minimum cost meeting the requirements of generators and consumers while keeping adequate levels of service quality and reliability this paper proposes a modern tool of economic evaluation based on real options analysis that provides the regulator the ability to assess various incentives that would lead transmission investors to make efficient decisions in highly uncertain environments real options properly values partially irreversible investment decisions such as to defer modify or abandon an investment project in response to the arrival of new information or as uncertainties are resolved decisions are evaluated from the point of view of a transmission investor trying to maximize its own profits in the time period set to recover the capital invested the results allow the study of the behavior of transmission investors regarding their decision making when they have the possibility to manage the option to defer under different regulatory schemes that encourage the expansion of the transmission system

marginal pricing of transmission services an analysis of cost recovery this paper presents an in depth analysis of network revenues computed with marginal pricing and in particular it investigates the reasons why marginal prices fail to recover the total incurred network costs in actual power systems the basic theoretical results are presented and the major causes of the mismatch between network costs and marginal revenues are identified and illustrated with numerical examples some tutorial and others of realistic size the regulatory implications of marginal network pricing in the context of competitive electricity markets are analyzed and suggestions are provided for the meaningful allocation of the costs of the network among its users

market based rate design for recovering merchant transmission investment merchant transmission projects mtps are primarily market solutions for importing inexpensive power when this energy is available as a market driven solution full recovery of the investment is not guaranteed in general the recovery is based on transmission service charges and the value of incremental financial transmission rights ftrs created by the project since ftrs are valuable only when the system is constrained the ftr s value diminishes as the constraint is eliminated by the mtp hence the mtp will be commercially viable only if its transmission capacity is fully subscribed otherwise the mtp will likely not be built

transmission management for congested power system a review of concepts technical challenges and development of a new methodology transmission networks have some constraints that should be addressed in order to ensure sufficient control to maintain the security level of a power system while maximising market efficiency the most obvious drawback of transmission constraints is a congestion problem that becomes an obstacle to perfect competition among the market participants since it can influence spot market pricing as the power flow violates transmission constraints redispatching generating units is required and this will cause the price at every node to vary this manuscript presents concepts technical challenges and methodology for investigating an alternative solution to the redispatch mechanism and then formulates lmp scheme using an optimisation technique that may well control congestion as the main issue the lmp scheme are varied and improved to take into account the energy price congestion revenue cost of losses as well as the transmission usage tariff by utilising shift factor based optimal power flow sf opf which is derived from the well known dc optimal power flow dc opf model

an analysis of the marginal value of electricity transmission lines in the dispatch possible applications the marginal value of transmission lines in the dispatch is widely used in the literature and has relevant practical applications related to planning the expansion of the transmission grid and computing the remuneration of merchant lines this paper presents a general formulation of the marginal value of a line in the dispatch that highlights the dependence of this value on the link between line admittance and capacity we discuss the value of a line according to marginal principles following a general approach and prove that only if the admittance of a line can be expressed as a linear function of its capacity or when admittance and capacity can be deemed independent is this value equal to the product of the difference between marginal electricity prices at both ends of the line and the flow through this line afterwards we show that under a set of stylized conditions the remuneration of efficient network investments according to their marginal value in the dispatch should result in an exact recovery of their cost finally we compute the marginal value of lines in a stylized though representative system for several relationships between line capacities and admittances to illustrate the theoretical results obtained

wheeling of power under deregulated environment of power system a bibilographical survey the power industry is moving rapidly from regulated conventional setup to a deregulated environment there is an urgent need to keep a track of international experiences and activities taking place in this emerging field this paper gives a bibliographical survey and general backgrounds of research and development in the field of power system wheeling under deregulated environment based on over 170 published articles wheeling in general and the establishment of wheeling rate in particular are subjects of extensive debate today this will be very much useful for all countries especially those developing countries which are moving toward the unbundling of electricity supply industry esi the collected literature have been divided into many section so that new researchers do not face any difficulty for obtaining literature particularly in the area of wheeling of power under deregulated environment

financial development and the instability of open economies this paper introduces a framework for analyzing the role of financial factors as a source of instability in small open economies our basic model is a dynamic open economy model with a tradeable good produced with capital and a country specific factor we also assume that firms face credit constraints with the constraint being tighter at a lower level of financial development a basic implication of this model is that economies at an intermediate level of financial development are more unstable than either very developed or very underdeveloped economies this is true both in the sense that temporary shocks have large and persistent effects and also in the sense that these economies can exhibit cycles thus countries that are going through a phase of financial development may become more unstable in the short run similarly full capital account liberalization may destabilize the economy in economies at an intermediate level of financial development phases of growth with capital inflows are followed by collapse with capital outflows on the other hand foreign direct investment does not destabilize

marginal pricing of transmission services a comparative analysis of network cost allocation methods a strict marginal network pricing policy is not able to generate enough revenues to recover the cost of the primary transmission service other related network services are ignored here this cost recovery problem requires the stipulation of a complementary charge which completes the network marginal revenues this paper evaluates numerically and qualitatively three different allocation methods of the complementary charge marginal participation factors mean participation factors and benefit factors the evaluation has been applied to the spanish electrical system model

a corporate balance sheet approach to currency crises this paper presents a general equilibrium currency crisis model of the third generation in which the possibility of currency crises is driven by the interplay between private firms credit constraints and nominal price rigidities despite our emphasis on microfoundations the model remains sufficiently simple that the policy analysis can be conducted graphically the analysis hinges on four main features i ex post deviations from purchasing power parity ii credit constraints a la bernanke gertler iii foreign currency borrowing by domestic firms iv a competitive banking sector lending to firms and holding reserves and a monetary policy conducted either through open market operations or short term lending facilities we derive sufficient conditions for the existence of a sunspot equilibrium with currency crises we show that an interest rate increase intended to support the currency in a crisis may not be effective but that a relaxation of short term lending facilities can make this policy effective by attenuating the rise in interest rates relevant to firms

decision analysis of merchant transmission investment by perpetual options theory this paper introduces the concept of perpetual options theory to analyze merchant transmission investment through an approved rate since the electric usages and the associated revenue is stochastic in nature applying the perpetual options theory allows an investor to determine the most opportunistic time to start a transmission project and obtain the maximum revenue returns or let the option expire when the economic incentive is not sufficient in today s environment this decision approach is more appropriate since it provides transmission investors a better projection of its return on investment and an exit strategy for an investment decision

spot pricing of capacities for generation and transmission of reserve in an extended poolco model the poolco model is emerging as one of the most acceptable options for organizing the spot market of electricity although the model represents a reasonable and safe transition from present industry practices to what is required in a competitive electricity market many important issues remain to be resolved in particular issues regarding reliability related services are of a special concern to the industry this paper is devoted to the issue of reserve service delivery and pricing the poolco model is extended in this paper to include spot pricing of reserve generation and transmission capacities as well as demand side bidding in the authors extended model suppliers submit bids for power as well as for reserve capacities a new formulation of the extended security constrained economic dispatch which allocates both power and reserve generation resources is presented in this paper the dispatch of the resources is constrained by limitations of system transmission capacities the proposed formulation is considered to be relevant not only in the poolco but in a more general setup an illustrative example is used to introduce concepts and present results finally some general issues regarding formats of proposals balance of payments and uniqueness of the prices that apply equally to both the original and extended poolco models are discussed

transmission use of system charges under future gb power system scenarios if transmission charges are to reflect costs they should be affected by the location of demand and generation this paper describes the investment cost related pricing icrp methodology used to calculate transmission charges in great britain gb which is based on the marginal investment cost of additional demand or generation using a dc load flow transport model we apply this existing method to calculate charges for the supergen futurenet scenarios for 2020 this study highlights the sensitivities in charges for use of the transmission system arising from plausible demand and generation developments the changes in tariffs will present financial challenges for system users in some areas the objective of the work presented is to illustrate the sensitivity of the charges produced by this methodology to changes in demand generation and network topology rather than compare alternative pricing approaches the conclusion drawn is that the icrp system pricing method may be suitable in future years but only with some important issues investigated and resolved

solving the revenue reconciliation problem of distribution network providers using long term marginal prices in this paper the authors describe an integrated methodology to compute long term marginal prices in distribution networks long term marginal prices are considered the most interesting and economically sound way of allocating network costs to users additionally they inherently deal with the revenue reconciliation problem as they generally do not require other large supplementary tariff terms the proposed methodology uses fuzzy sets to model uncertainties in load forecasts and considers several criteria to guide the identification of solutions at the end there is a final decision making step to select the most adequate expansion plan according to the preferences of the decision maker

a simple regulatory incentive mechanism applied to electricity transmission pricing and investment the informationally simple approach to incentive regulation applies mechanisms that translate the regulator s objective function into the firm s profit maximizing objective these mechanisms come i

competition and equity in health care markets we provide a model where hospitals compete on quality under fixed prices to investigate how hospital competition affects i quality differences between hospitals and as a result ii health inequalities across hospitals and patient severities the answer to the first question is ambiguous and depends on factors related to both demand and supply of health care whether competition increases or reduces health inequalities depends on the type and measure of inequality health inequalities due to the postcode lottery are more likely to decrease if the marginal health gains from quality decrease at a higher rate whereas health inequalities between high and low severity patients decrease if patient composition effects are sufficiently small we also investigate the effect of competition on health inequalities as measured by the gini and the generalised gini coefficients and highlight differences compared to the simpler dispersion measures

transmission investment in the peruvian electricity market theory and applications abstract this research presents an application of the mechanism in hogan et al 2010 hrv to promote electricity transmission network expansion in the peruvian electricity transmission system known as sein sistema electrico interconectado nacional the hrv mechanism combines the merchant and regulatory approaches to promote investment into transmission grids this mechanism gives incentives for efficient investment in expansion of the network by rebalancing over time the fixed and variable charges of a two part tariff in the framework of a wholesale electricity market with locational pricing the expansion of the network is carried out through the sale of financial transmission rights ftrs for the congested lines the mechanism is applied for 103 nodes of the sein using detailed characteristics of generators nodes and transmission lines under laspeyres weights and linear cost of expansion of transmission capacity it is shown that prices converge to lower price levels as a result of increased transmission capacity

coordination of generation and transmission development through generation transmission charges a game theoretical approach transmission charges aim to recover the cost of transmission network investments and provide efficient locational signals to new generators in this paper we investigate the effect of these charges on the development of new generation capacities in the system generation expansion planning is decided by strategic generation planners sgps trying to maximize their profits while transmission line investments are planned by a central planner and regulatory body aimed at minimizing the overall operation and network investment costs of the system regulatory transmission charges rtcs are calculated according to the marginal responsibility of generation investment on transmission network investment costs an iterative algorithm is proposed to model the interaction taking place between the central planner and sgps the developed methodology is applied to a 2 node illustrative example and the ieee rts96 and effects of rtcs on investment decisions of sgps are analyzed