The price to access the network: what role in electricity production and transport coordination?

Both short and long term location signals do not allow efficient production investment coordination with those of transport in liberalized electric systems. We first underline the short term failures of nodal electricity pricing, in spite of rare situation where such signals allow efficient production and transport coordination. Then we analyse the various prices, referred to as 'network', which are added to nodal prices, including zone prices, the zone pricing efficiently with average participation; we compare them according to four criteria of appreciation of their role in the coordination of the location of network production and investment means. Location signals designed in relationship to the long term certainly allow to improve the electricity production and transport investment coordination. Nonetheless, given the features of the economies of scale and the indivisibility of network investments, such signals only provide information about the existing network and its current use. In addition, access to the network is only one of the production equipment location constraints. This leads to lasting congestion which requires further network investments. As a result, control of the electricity transport monopoly remains crucial to the efficient coordination of production and transport investments. (author)