NERA Special Consultant Dr. Hethie Parmesano delivered a presentation to members of the Marginal Cost Working Group, directed by Dr. Parmesano, at the group’s Spring 2007 meeting in Savannah, Georgia on 26–28 March 2007. In her presentation, Dr. Parmesano describes an approach to transmission rate design proposed by the Alberta Electric System Operator (AESO). While Dr. Parmesano largely approves of the proposal, she offers several suggestions for improving the efficiency of the resulting price signals. She points out a number of implications that the AESO analysis has for transmission costing and rate design in other jurisdictions.