Long-Run Incremental Cost Pricing for Negative Growth Rates

Previous work on long-run incremental cost (LRIC) pricing for the use of network charges is based on the premise that the demand in the system is continuously growing over time, and there will always be a need for network reinforcement some time in the future. This premise is not always valid for all parts of a distribution network. Instead, some parts of the distribution network may experience prolonged negative load growth. The consequence is that as the demand decreases over time, there would be no need for network reinforcement. The traditional LRIC models would thus give zero charges for using these parts of the network. This paper extends the traditional LRIC pricing to reflect how a nodal increment might change the loading level of the distribution system with a negative load growth, and how this change can be translated into the costs/benefits to the network. Comparison in charges is made for circuits with both positive and negative growth rates.