Merchant transmission

Many believe that the single most important factor in the failure of the transmission system to promote and facilitate the restructuring of electric power industry is the breakdown of both traditional transmission planning processes and the emerging market-based incentives for identifying and realizing the needed transmission expansions. These difficulties have been exacerbated by uncertainty about the endpoint of the industry restructuring transition in terms of industry structure, the respective roles of regulation and competition in determining future revenue streams for investments and other factors. The growth of the merchant generation has largely de-coupled generation investment decisions from transmission investment decisions. The introduction of economic incentives through the creation of deregulated, competitive wholesale markets with clear market rules has led to a tremendous boom in merchant power generation plans in the past several years. Taking a lead from merchant generation business, the industry is now embarking on merchant transmission business where merchant transmission companies will assume "full market risk for the new transmission projects". In return these companies will seek to recover all of their costs, fixed and operating, and a reasonable profits, "from the revenues derived from voluntary, negotiated sales of physical and/or financial transmission rights on these new projects".