A unified transmission loss allocation method

A new unified method which allocates transmission losses either to buses in a pool market or to individual transactions in a bilateral contract market is presented in this paper. A detailed derivation of the method is given. A bus-loss matrix and a transaction-loss matrix are developed to show the interactions between bus injections and transactions. It is further demonstrated that the “Physical-power-flow-based” method can be obtained as an approximation of this unified approach under certain simplifying assumptions. Test systems are used to illustrate how the proposed method behaves under different possible scenarios.