On the objectives of transmission pricing under open access

In this paper, we pose the problem of cost minimization in an integrated power industry. Without claiming that this cost function is optimized in today´s industry, we use it as a measure of the overall optimal allocation of resources (transmission and generation). We show that the objectives of the transmission industry cannot be considered independently from the generation side. Several proposals for transmission provision and pricing are assessed by recognizing that both short-term use of resources and long-term investments depend on the transmission structure in place (price in particular).