Transmission-service pricing by incorporating load following and correlation factors within a restructured environment

This paper reports a new method for network transmission pricing technique which is based on load following and correlation factors in restructured environments. Considering new environments, transmission pricing analysis has become a challenging task because transmission network has a high constant cost and virtually no variable costs. As a result, literature pertaining to this subject proposes different methods that aim at considering equitable pricing in a competitive environment. This paper discusses their advantages and disadvantages. Therefore, a load following-based method which uses correlation factors for estimating transmission costs of each participant before entering the market is introduced. In previously proposed methods, only linear regression was used to estimate transmission costs. In this paper, however, the importance of using a combination of the linear regression and correlation factors is highlighted. A factor of partnership can be obtained that better describes the shares in transmission costs. Finally, the factor of partnership is calculated for a network with 39-IEEE bus system and a real-world system of northeastern part of Iranian national 400-kV transmission grid. Simulation results show the proposed method performs better than other methods.