A transaction-based method for allocation of transmission grid cost and losses

The problem of grid cost and losses allocation may be divided into independent subproblems: allocation of branch flow and losses to transactions, definition of these transactions and cost allocation to transactions. From this final allocation, the charges to participants in transactions may be made straightforwardly. A differential, slack-invariant method for the allocation of flow and losses to transactions that makes use of the AC load flow equation is presented here. The definition of transactions must be addressed using a non-discriminatory rule in pool systems. There are many possible options for this definition, and the choice made has great influence on the results. Cost allocation, on the other hand, may be made in different ways, as well. The paper presents an allocation process that addresses all these issues. Results for the IEEE-RTS96 test system are obtained and discussed.