Transmission Cost Allocation in Restructured Power Systems Based on Nodal Pricing Approach by Controlling the Marginal Prices

Abstract: This paper presents a method to allocate the transmission network costs to users based on nodal pricing approach by regulating the nodal prices from the marginal point tothe new point. Transmission nodal pricing based on marginal prices is not able to produce enough revenue to recover the total transmission network costs. However, according to theprevious studies in this context, this method recovers only a portion of transmission costs.To solve this problem, in this paper a method is presented in which by considering thedirection and amount of injected power in each node the marginal price is regulated to thenew price, in such a way as the nodal pricing can recover the total transmission networkcosts. Also the proposed method is able to control the cost splitting between loads and generators in accordance with the pre-specified ratio. The proposed method is implemented on both IEEE 24-bus and 118-bus test systems and the obtained results are reported.