Transmission Rights and Transmission Expansions

Abstract

In this paper, we propose a new method of defining rights that may be assigned to the developer of a transmission expansion project. They include a right to collect the value of the capacity provided by the expansion project as well as the value arising from the admittance of the expansion project. This approach not only ties the rights allocation to actual physical characteristics of the transmission project but also allows such allocation to remain independent both of the order in which the projects are treated and of any previously allocated transmission rights.