PWP-023 Folk Theorems on Transmission Access: Proofs and Counter Examples

Nodal prices, congestion revenues, transmission capacity rights, and compensation for wire ownership are key concepts used to formulate claims about proposals to organize competitive and open transmission access. Underlying those claims are implicit assertions (folk theorems) concerning the regulation of transmission access, the determination of power ows, properties of economic dispatch, and the operations of competitive nodal markets for power. The paper has two objectives. We rst formulate these folk theorems as explicit mathematical assertions. We then prove that some of these assertions are true, and we present counterexamples to other assertions. The counterexamples are interesting because they negate plausible propositions, including: (1) uncongested lines do not receive congestion rents (de ned through node price di erences); (2) nodal prices clear markets for power only if the allocation is e cient; (3) in an e cient allocation power can only ow from nodes with lower prices to nodes with higher prices; (4) strengthening transmission lines or building additional lines increases transmission capacity; (5) transmission capacity rights are compatible with any economically e cient dispatch.