What Makes Up Transmission Costs?

Transmission costs include the Network Integrated Transmission Service (NITS), which basically is the cost for using the transmission system. The rate, which varies by transmission zone, is based on the transmission owner’s capital and operating costs.

The rate is approved by the Federal Energy Regulatory Commission (FERC) and updated annually based on a formula that incorporates costs provided by the transmission owner. Like capacity, the charge is the rate times the customer’s Net Service Peak Load (NSPL), which is also referred to as Peak Load Share (PLS).

Congestion and Losses also affect transmission costs. Congestion is a situation in which heavy use of the electric grid prevents the lowest-priced electricity from flowing to a specific area. Losses occur when electricity is transmitted over distances. However, Congestion and Losses can be positive or negative depending on location and flows on the transmission system.

Net Congestion and Losses account for the differences across the PJM region in the Locational Marginal Price (LMP), which is the market clearing marginal price for energy where it is delivered or received.

How to Determine Your Transmission Costs

Click here to access a quick reference guide that gives you everything you need to calculate your costs.

Last Modified: March 10, 2016