Wheeling

Wheeling arises when a generator and a buyer connect at different points and the network between them belongs to someone else. The network owner charges for its use. The regulator usually sets the charge, either per kWh delivered or per MW of capacity reserved each month. The charge often depends on voltage level. A buyer connected at high voltage typically avoids the lower-voltage network and its charges.

Losses are handled separately. The network loses a share of the energy as heat, so less arrives than was injected. The loss factor is usually fixed by the regulator as a percentage for each voltage level and deducted in kind. The contract sets who bears both costs. In most corporate deals the buyer pays them, so the price quoted at the generator's busbar is lower than the price the buyer ends up paying.

Wheeling charges and losses are often the difference between a busbar price that looks cheap and a delivered price that does not. A buyer comparing offers needs every offer on a delivered basis. A developer needs to know who carries the risk when the regulator changes the charge mid-contract. It also needs to know whether siting the plant closer to the buyer, or connecting at a different voltage, would cut the cost.

In India, wheeling is a routine line in every open-access bill, set by state commissions, with concessions for renewables in some states. In the US, the term mostly describes transmission service across a utility's system under open-access tariffs approved by FERC. In Europe, network charges reach consumers through their supplier as use-of-system tariffs set by national regulators, and the word is rarely used.