An analytical approach for transaction costs allocation in transmission system

This paper proposes an analytical approach for allocating transmission transaction costs among users in transmission services. The proposed method allocates the transaction costs over the participants proportional to the ratio of incremental power flow caused by each participant and the total power flows on a designated transmission line. To determine the individual participant´s impact on the transmission power flows, the line utilization factors (LUFs) of each participant are developed from a set of power flow equations. In the developed framework, one can directly evaluate the sensitivity of the flow on a line with respect to power generation at all buses. Although the developed allocation rule is very similar to the existing MW-mile method, especially to the modulus method, it does not require load flow analysis to be performed whenever each wheeling transaction is exercised. The main advantage of the developed method lies in its capability to consider multiple wheeling transactions simultaneously