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A cross-subsidy surcharge is levied on an open access consumer to

  • A.recover the licensee's cost of power purchase
  • B.compensate the licensee for the subsidy that consumer was providing
  • C.recover the cost of the wires used to convey the energy
  • D.pay for the standby supply the licensee must hold

Answer: B

A large industrial consumer leaving the licensee takes with it the surplus that was funding agricultural and domestic tariffs, and the surcharge holds that contribution. It is why open access is often uneconomic despite cheap market power.

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