Apart from power procurement with cogen and IPP the electricity supply industry has been run by a vertically integrated Taipower Company in Taiwan. In response to the global trend of deregulation, the draft of Electricity Act amendment plans to introduce market mechanism into the industry. Power industry is capital intensive and careful assessment of the investment and various costs involved are crucial. Therefore, it is important to carry out a systematic analysis of transaction costs and related charges after electricity deregulation to facilitate the fair competition.
The purpose of the study is to explore the transaction costs and related charges after electricity deregulation for both overseas countries and Taiwan. These costs may contain the items of power system planning, dispatch, ancillary service, grid service, compensation and land use. How to allocate these costs among various parties is a necessary task for facilitating the power market deregulation.
According to the amendment of Electricity Act from Executive Yuan, generation, transmission, distribution, integrated utility and ISO will be the main market participants. Generation will be the power producer and is not a utility any more, but distribution and transmission will remain utilities and act as common carriers. Their grid will open for others to access. In order to maintain the fairness of market and system operations, Independent System Operator (ISO) will function as a market and power system management organization and is responsible for the security and reliability of the electricity supply. Accordingly, ISO is entitled to charge “Dispatch Fee” for their services. In this study, we reviewed the fee structures and computing formulae adopted by foreign dispatch centers and concluded two items for the cost structure, namely market service cost and operation cost. The former includes the cost for maintaining the security and reliability of the power system, the latter consists of the cost