Determination of loss factors in a deregulated system

In a deregulated system, a non-profit organization known as an independent system operator (ISO) in some jurisdictions or an independent market operator (IMO) in other jurisdictions usually is responsible for the operation of the system. In addition to the operation and control of a system, typical tasks of an ISO may also include accepting bids from generators, providing access to the successful bidders and allocating transmission loss among the generators. Based on the allocation of transmission loss and previously agreed terms, a generator is either required to supply its share of loss to the system or is required to pay for its share of loss. In either case, the allocation of transmission loss is a very contentious issue for the simple fact that transmission loss is a complex non-linear function of power provided by the generators and sensitive to system state. A new technique to allocate transmission loss among the generators has been developed and presented in this paper. The technique is based on marginal transmission loss and source-sink relationship between the generators and the loads. The method is computationally efficient and can be utilized to calculate the loss factors associated with the generators on an hourly basis. The proposed method overcomes some of the disadvantages associated with earlier methods in terms of transparency and fairness. This paper presents the salient features of the proposed technique with numerical examples. The advantages and limitations of the proposed method are also discussed