Electricity market reform

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					Electricity market reform

Transmission towers in the New Zealand countryside Transmission is a natural monopoly and there are moves in many countries to separately regulate transmission (see Electricity market). Spain was the first country to establish a Regional Transmission Organization. In that country transmission operations and market operations are controlled by separate companies. The transmission system operator is Red Eléctrica de España (REE) [4] and the wholesale electricity market operator is Operador del Mercado Ibérico de Energía - Polo Español, S.A. (OMEL) [5]. Spain's transmission system is interconnected with those of France, Portugal, and Morocco. In the United States and parts of Canada, electrical transmission companies operate independently of generation and distribution companies. Merchant transmission Merchant transmission is an arrangement where a third party constructs and operates electric transmission lines through the franchise area of an unrelated utility. Advocates of merchant transmission] claim that this will create competition to construct the most efficient and lowest cost additions to the transmission grid. Merchant transmission projects typically involve DC lines because it is easier to limit flows to paying customers. The only operating merchant transmission project in the United States is the Cross Sound Cable from Long Island, New York to New Haven, Connecticut, although additional projects have been proposed. There are five merchant transmission interconnectors between five states in Australia: the DirectLink, QNI, MurrayLink and Southern Link between New South Wales and South Australia and Basslink between Tasmania and Victoria. A major barrier to wider adoption of merchant transmission is the difficulty in identifying who benefits from the facility so that the beneficiaries will pay the toll. Also, it is difficult for a merchant transmission line to compete when the alternative transmission lines are subsidized by other utility businesses.[7]