The cost and pricing method of uniform transmission services

In the context of competitive electricity marketplace, transmission plays a vital role in the efficient, steady operation of power systems and electricity markets. One of the most important issues in transmission management is transmission pricing, to which much attention have been paid. In this paper, some questions about the costs and pricing of the uniform transmission services, which are defined as the transmission services in ideal deregulated competitive marketplace and which are different in many ways with wheeling services, are discussed. The meanings of incremental cost, marginal cost, opportunity cost, and reliability cost of uniform transmission services are analyzed. Two kinds of definitions of uniform transmission services are proposed: point-to-point services and branch-based services. The respective meanings of the quantity of the services needed by each transmission transaction and the costs of the services in the two ways of definitions are analyzed. The pricing methods are classified into bilateral-transmission based methods and node-based methods. according to the transaction types and classified into one-part tariff methods and two-part tariff methods according to the economic principles. For each pricing method, the characteristics, difficulties and current settlements are discussed.