Usage based allocation for transmission costs under open access

Abstract

This paper analyses some issues related to the transmission cost allocation for grids with open access. Allocation methods based on electricity tracking are presented and compared with methods based on sensitivities as well as with the postage stamp rate. The main purpose is to appraise in a critical manner the practicality of these methods and their capacity to send efficient economical signals. Full and usage capacity pricing are presented in contrast. Three options for dealing with counter flows are considered and their influence on cost recovery under used capacity pricing is outlined. The pricing strategies and methodologies are depicted for a 9-bus test-system including pool, bilateral and wheeling transaction.

Transmission pricing software for power engineering education

“…The transmission users are charged based on the actual line flows they cause, so these methods motivate an efficient use of the transmission system. However, their drawback is that the recovery of the fixed transmission costs is not guaranteed, because the actual line flows are usually smaller than the transmission line capacities [14].…”

“…The counter flows are very helpful because they reduce the loading level of the facilities. Thus, the losses could be decreased and congestions could be avoided, so the available transfer capacity could be increased [14]. However, allowing negative allocation (credit) due to counter flows may not be easily accepted from network owner and some network users who will be charged a big portion of transmission fixed costs [15].…”

“…In the unused reverse MW-mile, users get credit for the counter flows they cause. More specifically, the charge for user t is [14] TC…”

“…In the used zero counter flow MW-mile method, the users have to pay only for the positive flows and nothing for the counter flows. The charge for user t is as follows [14]:…”