Allocation of fixed transmission costs to different network functions

• Main Authors: Pirovano, F., Eve, T., Amandaly, F.
• Format: Conference Proceeding
• Language: English
• Subjects: Cost function; Economic indicators; Power generation economics; Power industry; Pricing; Propagation losses; Regulators; Research and development; System testing; Transfer functions
• DOI: 10.1109/DRPT.2000.855683

The services required by the users of a transmission pricing system can be quite different. Most of them need the network throughout the year to transport electricity to distant clients, but others could just need to transport electricity over shorter distances or for shorter periods of time. The TSO and the regulator will have to take into account the needs of such users if they want the transmission pricing system to be fair and nondiscriminatory. This paper proposes an economic indicator the authors called the assistance ratio which could be used to assess the part of fixed transmission costs to be allocated to "short-term" users as opposed to "normal", or "long-term", users in a transmission pricing system based on a postage stamp method. "Short-term" users, mostly consumers having their own generating plants, just need interconnection to benefit from assistance by other producers in case of failure of their facilities, so they generate flows on the network only a few hundred hours a year. This indicator is the ratio between the cost of the virtual network which would be needed if all users were short-term ones and the cost of the actual network. A case study is carried out on the 24-bus IEEE Reliability Test System.