Interchange costing and wheeling loss evaluation by means of incrementals [electricity]

The authors consider the incremental pricing concepts and incremental loss concepts for use in real-time operations involving interchange evaluation and wheeling loss evaluation. They provide an overview of methods to evaluate the cost of electrical energy for purchases and sales using incrementals (i.e. derivatives of energy costs and energy losses). Since incrementals are directly available from economic dispatch, the methods are well suited for rapid on-line costing. The authors extend the incremental methods to calculate on-line losses associated with three-party or wheeling type transactions. The accuracy of the method of calculating wheeling losses is verified by a load flow comparison. The potential impacts to the production cost for such transactions are also evaluated using a large system model. Finally, it is pointed out that the overall production cost of the wheeling utility may increase or decrease, even though the wheeling losses are completely accounted for, due to the change in generation profile which results from adjustments in the economic dispatch