Reliability component in transmission service pricing

This paper presents a method to develop and incorporate a reliability component in transmission pricing. The method includes the following three tasks: developing a technique to establish an unit reliability value; quantifying impacts of customer on system reliability; and incorporating the reliability component in the rate design. The proposed method calculates the charge or credit to a native, wheeling, or generation customer in terms of its impact on system reliability. Incorporation of the reliability component will force all players in the system (the utility and customers) to share their responsibility in system reliability through a price signal and provide an incentive message to encourage the right siting of new generations. The method also reflects the long run incremental investment requirement of a transmission company. The procedure of the proposed method has been explained using the BC Hydro system in Canada as an example