Separation of power systems into a unique set of zones based on transmission usage of network tariffs and transmission loss tariffs

• A new tariff zoning methodology is presented.
• Marginal pricing procedures are addressed with example of Turkish power system.
• Correlation between nodal tariffs are investigated.
• Mismatches between nodal tariff zones are iteratively eliminated.
• A unique zonal tariff sets are created with the proposed zoning algorithm.

Transmission usage of network tariffs (TUNT) and transmission loss tariffs (TLT) are among the most important pricing mechanisms that are utilized to recover main transmission costs in today’s electricity markets. Separation of entire power network into different tariff zones is a common approach which simplifies the tariff mechanisms particularly for large power systems. Zonal distribution of nodal tariffs that is calculated based on classical weighted-average procedures can be different given the difference between the calculation methodologies of the TUNTs and TLTs. However, correlation between nodal TUNTs and TLTs can be very strong, particularly when they are determined based on marginal pricing methodologies. This paper proposes an approach which separates a power system into a unique set of zones considering the nodal distribution of TUNTs and TLTs. In this approach, mismatches between the nodal elements of TUNTs and TLTs zones are iteratively eliminated until a unique zonal tariff sets are created. Application of the proposed zoning approach is discussed on the zonal TUNTs and TLTs of the Turkish power system. Numerical verification of the proposed zoning methodology is made with the IEEE 24 Bus System. Unique set of tariff zones can be represented on a map which will provide significant and consistent indication about the transmission enforcement requirements of the network in a simplest and efficient manner.