Open access transmission system pricing in a restructured power sector: A case study of Ghana

The emerging trend in power sector restructuring has made open-access use of the transmission system a critical element in the reform process. The principal purpose of this paper is to propose an open access pricing framework, which is fair, economically efficient, technically meaningful and practical to implement, and which will provide incentives for investment in needed transmission facilities. The proposed transmission pricing methodology takes account of transmission system constraints, connection charges, transmission line availability, congestion and transmission loss factor. Cost for connecting generators and consumers to substations are recovered through a connection charge. Compared to the Postage Stamp pricing philosophy currently used in Ghana where all customers pay a uniform rate, costs in the new pricing approach are assigned fairly and equitably to open access customers, based on the amount of 'stress' imposed on the transmission system. The proposed transmission pricing methodology offers an effective way of using price signals to relieve congestion and to send the correct signals in terms of locational advantage for future investment.