Long-Run Network Pricing to Facilitate Users´ Different Security Preference

This paper proposes a new long-run network pricing model that can account for network users´ preference for security of supply when assessing their impact on network development costs. The new model firstly classifies load at each node into interruptible and uninterruptible parts according to their different security preference. It then seeks to examine the impact on the network development costs from a marginal increment of the two types of loads at each node. It assumes that interruptible loads can be interrupted under contingencies, whereas both loads should be satisfied under normal conditions. Use-of-system (UoS) charges are then calculated by translating the impact on network development costs into locational long-run network charges. Compared with the existing approach which assumes that consumers at the same locations are subject to the same security levels, the proposed approach acknowledges users´ different security preference, respects the reduced requirement on the network development costs from interruptible loads, and prices users´ UoS charges accordingly. The paper demonstrates that network charges for interruptible loads are cheaper than those for the uninterruptible loads at the same node. The degree of the difference depends on the percentage of interruptible loads in the system and at the node. The pricing signals could incentivize prospective users to switch their behaviors in favor of lowering the overall network security requirements, and thus lowering network reinforcement costs. This will ultimately bring down users´ UoS charges. The effectiveness of the proposed approach over the basic security-based long-run pricing model is illustrated on two networks in terms of charges for the two loads and the impact of load composition on the charges.