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Pricing in electricity transmission and distribution

Transmission and distribution (T&D) networks are becoming separated from generation utilities throughout the world as the advantages of allowing competition in electrical energy production become more evident. The T&D networks must allow access to their systems on an equitable basis for all customers, thereby requiring fair and transparent use-of-system charges. In this paper the contract path and the infrastructure methods of charging are discussed and their advantages and disadvantages assessed. Because T&D utilities are natural monopolies, regulatory principles need to be applied by a regulatory body to ensure that all parties, the consumers, the generators and the national economy, benefit from T&D activities. Regulatory functions and processes are considered in some depth so that the impact on prices can be appreciated.