Value-Based Electric Transmission Costs Allocation

Despite the fact that transmission network has a vital role in electricity markets and cost of transmission expansion is considerable, but transmission charges represent a small percentage of power system operating costs. Thus, transmission cost allocation should be a reasonable economic indicator to make decisions on facility allocation, transmission expansion and other similar market tasks.This paper, focusing on value-based transmission pricing, includes commercial and reliability benefits. The capacity of each transmission facility is divided into two parts: commercial capacity and reliability capacity. Commercial capacity represents the economic role of transmission capacity as well as reliability capacity that represents the security role of transmission. The cost allocation of commercial capacity is determined by calculation of beneficiaries of each transmission facility. For reliability capacity of each facility, the contribution of each transmission user is determined by estimation of reliability benefits of each facility by taking into account transmission forced outage rates as well as the outage impact factors. With this transmission pricing method, we allocate the transmission cost to the users in a more reasonable way as compared to conventional transmission pricing. Finally, the proposed method is applied to a 3-bus and 24-bus (IEEE - RTS) test system.