Evaluation of charges for power transmission and losses in bilateral power contracts

The paper presents a method for transmission loss charge allocation in deregulated power systems based on Relative Electrical Distance (RED) concept. Based on RED between the generator and load nodes and the predefined bilateral power contracts, charge evaluation is carried out. Generally through some power exchange mechanism a set of bilateral contracts are determined that facilitate bilateral agreements between the generation and distribution entities. In this paper the possible charges incurred in meeting loads like generation charge, transmission charge and charge due to losses are evaluated. Case studies have been carried out on a few practical equivalent systems. Due to space limitation results for a sample 5 bus system are presented considering ideal load/generation power contracts and deviated load/generation power contracts. Extensive numerical testing indicates that the proposed allocation scheme produces loss allocations that are appropriate and that behave in a physically reasonable manner.