Flexible mix and match approach for network fixed cost allocation

Different transmission fixed cost allocation methods lead to different nodal charges. Development of new transmission pricing scheme is guided by generic principles of transmission pricing. Each method available in the literature and used in practice, conforms to a certain set of principles, if not all. A transmission pricing mechanism for a system is chosen so that it tries to satisfy most of the country and system specific requirements. The ever conflicting requirements do not allow choice of a single method that satisfies all principles. This paper proposes a new transmission pricing paradigm based on flexible mix and match approach. Aim here is to create a generic flexible toolbox that considers viewpoints and preferences of all stake-holders in terms of principles of transmission pricing, rather than devising a new transmission fixed cost allocation methodology. Thus, the final constitution of nodal transmission charges embeds relative weights given to each principle by each stakeholder. Analytical Hierarchical Process (AHP) is used as a tool for the said approach. The results have been obtained on IEEE 30 bus system to demonstrate the suitability of the scheme.

► We propose a transmission pricing paradigm based on flexible mix and match approach.
► Stakeholder viewpoints are considered in terms of principles of transmission pricing.
► AHP is used as a flexible toolbox to compare methods based on these principles.
► Output of AHP is used to weigh transmission prices from different methods.