Pricing of Transmission Services in a Deregulated Power System (original) (raw)
An Approach For Evaluation Of Wheeling Charges In A Deregulation Power Network
International Journal of Scientific & Technology Research, 2021
Deregulation of power sector introduces competition into the electricity market and gives separate ownership identities into the management of its subsystems-generation, transmission, and distribution. Thus, this requires the determination of a viable wheeling charge method that is economical, transparent and acceptable to both the operators and the consumers in ensuring a secure and a reliable system. However, the type of transmission charge to adopt posed a serious challenge to the power system operators because the cost of transferring power between any two points on the transmission system is not fixed, since it depends on the generation and the load pattern on the system. This paper introduced a hybrid combination of the MVA-kilometer and the Short-Run Marginal Cost (SRMC) methods that used power flow and optimal power flow (OPF) analysis to determine the individual participant's impact on the transmission power flows for wheeling cost allocation. The proposed method has been investigated on the Nigerian 330kV, 24-bus network. The results showed that the proposed method was economical, transparent and able to recover both fixed cost and the operating cost effectively.
A Comparison of Fixed Cost Based Transmission Pricing Methods
Electrical and Electronic Engineering, 2011
In the restructured power market, it is necessary to develop an appropriate pricing scheme that can provide the useful economic information to market participants, such as generation, transmission companies and customers. Proper pricing method is needed for transmission network to ensure reliability and secure operation of power system. Accurately estimating and allocating the transmission cost in the transmission pricing scheme still remains challenging task. This paper gives an overview of different costs incurred in transmission transaction, types of transmission transactions and the transmission pricing methodologies. Embedded as well as Incremental cost methods are explained. It mainly focussed on determining the embedded transmission cost by various methods and compared the results for 6bus, IEEE 14bus and RTS 24 bus systems.
Transmission system management and pricing: new paradigms and international comparisons
IEEE Transactions on Power Systems, 1994
The transmission system, once the necessary but nearly invisible component of the electric power system is now the focus of physical/electrical and financial attention of the utility and, more significantly their potential suppliers/customers. This paper has three primary objectives. The first is to present a discussion of a new paradigm for the electric power industry. The second is to review transmission pricing options, specifically those utilizing either long run (LRMC) or short run (SRMC) marginal cost based approaches. The third will be to provide a review of innovative approaches to transmission asset management and finance as seen from international experience.
Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market
American Journal of Electrical Power and Energy Systems
During the regulated power system era, the three major components of the power system are treated as a single entity and managed by same firm. Electricity was then treated more as a welfare commodity based on political patronage. With the wide adoption of deregulation, which resulted in the wholesome privatization and commercialization of the generation and distribution components, the transmission facility was left in the hands of the Government. Considering that this is a sure link between the other two, there is greater need to develop a mechanism for its appropriate tariff determination in order to ensure fairness to all its users. A significant deficiency in its pricing is the non-inclusion of the reactive power component, which is seriously needed to ensure system stability. This work involved the performance evaluation of four embedded transmission pricing models. Based on the need to build-in payment for reactive power which is necessary to ensure system stability, further presents an improved postage stamp transmission tariff-pricing model that incorporates both real and reactive component of power. The Postage stamp method calculates all the network costs and divides it by the overall power transmitted through it. This single rate is charged to users irrespective of the source and destination of power transactions. This is a simpler, fairer and easier to implement approach for computation using Matlab and Excel Software packages. The proposed method gave average price of 29.48$/hr as against $27.75/hr when reactive power was not included for the South African 18-Bus System. This showed slight improvement when compared to the conventional approach where reactive power was not included in the power transaction. It may be applied in developing countries like Nigeria where Government is gradually pulling out of full funding of the power sector, and seeking for technically sound and financially buoyant local and foreign firms to take over significant part of the sector. The distance flow based and cost flow based methods showed very higher costs which may not be suitable for developing countries at their present stage of deregulation due to very low income per capita and low level of industrialization.
2019
Transmission wheeling pricing is one of the decisive aspects of present open access electricity market. Various methods are available for transmission; however, no method is proved to diverse operating conditions of power system. These methods are not able to quantify the full recovery of embedded cost. All the variables i.e. remaining charges, used circuit capacity are not counted in the existing methods. This Paper explicates two methods, Modified Amp – Mile method and MVA Utility Factor method, to recover embedded cost. Modified Amp-Mile method is customized form of existing Amp-Mile method. In the MVA Utility Factor method, cost allocation is based on marginal participation (MP). It evaluates the cost, using sensitivity analysis of network power. The proposed methods are tested on an IEEE 6 bus system and further verified on Hadoti region real 37 bus system. All the results are presented in Full Recovery Model (FRM) and Partial Recovery Model (PRM).
Electricity Transmission Pricing Principles
2004
This article lays down economic principles that should govern electricity transmission pricing when peak-load pricing is used to set tariffs. Transmission systems perform three different functions: to transport energy, to substitute for generation capacity, and to increase competition in the system. It is shown that the generating companies should absorb long-run marginal costs so that the proper investment signals are
Embedded Wheeling Cost Methodologies in Deregulated Electricity Industry
Power industry is moving rapidly from regulated monopolistic conventional setup to a deregulated free environment. Wheeling and its cost setup including the methodology by which it is computed are high priority problems throughout the power industry. It will be very useful especially for the developing countries moving towards the unbundling of electricity supply industry. This paper presents the exposition of wheeling of power, its necessity, and a detailed presentation of exposition of data requirements and description of some wheeling cost methodologies to allocate wheeling cost in case of multiple wheels. In case study, an application example is illustrated. Computational results obtained by applying a software package developed in C language to calculate the wheeling cost by all embedded wheeling cost methods are tabulated.
Transmission access pricing to wheeling transactions: a reliability based approach
IEEE Transactions on Power Systems, 1998
Due to economy of scale, several methodologies for allocation transmission costs do not recover the fixed costs of transmission assets. To avoid this problem, in this paper a methodology is proposed which considers that each circuit has two functions : to allow the power transmission between two points and to assure the system reliability. Thus, the revenue of each circuit is obtained in two parts : one part that considers the system use under normal state and the se'cond part that consider the system use under contingency ctmdieions. Application of the methodology is illustrated [on a small, but realistic test system.