A used-based allocation model for revenue adequacy in congested networks with financial transmission rights markets

A new strategy designed with the purpose of achieving revenue adequacy in congested networks that use financial transmission rights - FTR markets is presented in this paper. In such markets, the independent system operator is required to cover payments to awarded FTR holders through congestion revenues. When this is not possible, there exists an unbalance or revenue inadequacy. Several approaches are used today to allocate this inadequacy overcharge like a pro-rata scheme. These methods don\´t take into account the use of the network by the agents (loads and generation). The model suggested in this paper is based on applying the principle of equivalent bilateral exchanges -EBE to allocate revenue inadequacies. The advantage is the possibility of incorporating the concept of "pay as used" a service among agents. Numerical tests show comparatively the presence of cross-subsidies produced by the normally used pro-rata method which are not present in the suggested approach