A New Method for Charging Transmission Services

In deregulated power systems generation, transmission and distribution are devolved into three separate businesses. In the transmission business it involves the running of the transmission network and the maintenance of the network components. The use of the transmission network to transmit power is known as the transmission service and it is treated as a commodity sold to market participants so a charging method must be developed to support this concept. The current thinking of some market participants favours the charging of transmission service is in proportion to the line capacity used, for instance the Average Participation (AP) Method, whilst others claim that the nodal pricing is a better charging method because it is based on power market theory. However none of them has solid evidence to prove the superiority of one over the others. In this paper a new charging method is introduced to resolve the transmission payment problem. In general, the new method is a combination of the two existing methods discussed above, which makes use of advantages in both methods to achieve the transmission payments allocated and distributed properly. In the full paper two sorts of current charging methods will be discussed and compared. It will indicate that the power flow tracing algorithm in Average Participation has a remarkable ability of allocating transaction flows meanwhile the Nodal Pricing method introduces a better structure of the competitive market. Nowadays most of power systems all around the world are undergoing deregulation changes and Nodal Pricing appears to be a better and more preferable choice in reconstructing the systems. However Nodal Pricing alone is unable to provide the same degree of transmission information which can be achieved in the AP method. As a result the power flow tracing algorithm can be used to help Nodal Pricing allocate the transmission charges to the related transmission lines. In addition its application is not influenced by political borders, which means it can be used in a single system or in an area including many zones. In the paper the combined method is tested on the IEEE 118 network and the results are also compared with the commonly preferred Nodal Pricing method. The differences in the results and the advantages of the proposed will be discussed in the paper. It is illustrated that the new method is able to combine the advantages of the AP and the Nodal Pricing methods for charging transmission charging.