Review of Cost Based Transmission Losses Allocation Methods

In the context of competitive electricity market, transmission losses, which represent an important component of transmission costs, must be allocated to transmission users equally and rationally. The allocation methods can be broadly classified into three categories, i.e., postage-stamp methods, marginal cost based methods and cost based methods. Cost based allocation methods are more reasonable than postage-stamp methods and are less complicated than marginal cost based methods. In this paper, the cost based allocation methods are systematically summarized, compared and tested with IEEE 30-bus system. The analysis indicates that some losses allocation methods actually lead to the same outcome