Comparison in varied aspects of transmission pricing used on long run average incremental cost

Even though there is no standard procedure for restructuring a vertically integrated electric utility, it often involves the separation of generation and transmission sectors. This created the need for the pricing of transmission service charge. To implement the transmission service charge. the National Energy Policy Office has retained consultant companies, which are PricingwaterhouseCooper (PwC) and Frontier Economics, to propose transmission service pricing schemes. Although both PwC and Frontier Economics pricing schemes are based on long run average incremental cost, their strategies and philosophies for use of system charge and financial consideration are different. This paper also provides the details, comparisons, and analysis of both transmission pricing schemes.