Many countries have introduced competition in their electric power sector. In general the transmission system was kept as a natural monopoly, separated from generation and distribution. In this context pricing systems were developed for using the transmission system, complying with the regulatory framework and giving access to all players in a non-discriminatory way. As further requirements the pricing systems should give an incentive to economic efficiency and allow an easy handling of transactions to promote competition. In principle two different tariff systems were established: The node-based point tariff referring to the connection points of load and generation (e. g. England & Wales, Norway) and the transaction-based point-to- point tariff referring to the stretch of way (e. g. USA). The tariff calculation is mainly based on "postage stamps" defined as an annual fee based on capacity or peak load as main cost factor. These postage stamps depend additionally e. g. on the time of use or the location in order to reach an efficient use of the system. Due to the special situation in Germany the existing pricing systems had to be further developed. Since there are 8 independent transmission utilities the "pancaking" has to be avoided and as no uniform load flow directions exist in the meshed system a zonal tariff is not applicable to control locations of load and generation. The new Energy Industry Law in Germany introduced negotiated network access in 1998. At the same time the industry and the utilities agreed on a framework for network access and determination of fees. These regulations totally within the private sector have prevented the introduction of a governmental regulator. The transit fees are based on cost prices. This ensures that the grid costs, including interest on equity and preservation of real assets, are covered. However, a strict cost management is necessary. In the distribution networks, the transmission fee depends on capacity exclusively ("postage stamp"). In principle, each customer pays only for the voltage level he has actually used. In the transmission system, the transmission fee is divided into two parts: In addition to the capacity-dependent share (calculated as a mean value of the fees at the feeding and tapping point), there is a distant-related share which is uniform throughout Germany and applicable to distances above 100 km between feeding and tapping points. The dependence on distance leads to a pricing oriented on actual grid costs since the costs depend both on the power to be transferred as well as on the distance to be covered. This ensures that there continues to be an incentive to generate electricity close to the points of consumption and hence to keep transmission distances small. In addition to the transmission fees, the ancillary services (frequency control, voltage control, system operation and service restoration) are invoiced. A long-term reserve is explicitly not included, since this responsibility lies with the customer. The specific network costs are determined on the basis of the respective annual peak load, but individual peak loads of customers, taken as a basis for the fee calculation, do not occur at the same time as the annual peak load. Therefore, the determined transit fee is corrected by means of a simultaneity factor depending on the annual utilisation period. Average grid losses on the voltage levels and in the transformations applied are invoiced in addition.
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