Market-based transmission: property rights meet Kirchhoff

Traditional property rights paradigms in electric transmission in North America such as "contract path" and zonal approaches fail to match the physics of Kirchoffs laws. While this drawback was workable prior to open access, the advent of multiple wheeling transactions and wheeling for nonutilities, among other issues, has led several jurisdictions to institute paradigms for financial rights that better match the physics. These paradigms and extensions of them may also allow for merchant transmission. We discuss the relationship of a transmission rights mechanism described in the literature to sensitivity-based models for transmission expansion.