Challenges facing the European power transmission tariffs: The case of inter-TSO compensation

This article draws attention to problems important for all EU power consumers—the unfairness in individual payments for power transmission and in the cross-border subsidy element in the mechanism of Inter-Transmission System Operators (TSO) Compensation (ITC). A brief review of power transmission tariffs brings out the structure of the problems. A short retrospection explains their growth. The essence of the ITC mechanism is explained and existing shortcomings are illustrated. The deficiencies of existing regulations for transmission pricing are analyzed. In the light of this analysis, the ITC problem is reconsidered and defined more precisely. The basic prerequisites to an ITC reformulation process are presented. The main principles of a new simple, transparent and equitable approach are suggested, in accordance with the contemporary legal positions and functions of the TSOs.