A More Fair Power Flow Based Transmission Cost Allocation Scheme Considering Maximum Line Loading for N-1 Security

This paper proposes an efficient approach to transmission fixed cost allocation in a pool based electricity market that takes into consideration N-1 secure annual system operation. The optimal capacity of a transmission facility is defined as the maximum power flow the facility may face under a contingency situation for a certain system snapshot. In this pricing approach, for each time interval, the largest optimal capacity of a transmission facility is calculated for all N-1 conditions considering a security constrained optimal power flow. Charges for each facility are based on the facility usage of the largest optimal capacity for all time intervals during one or more years. Network usage is determined by generalized distribution factors and three variations of the MW-Mile method for pricing counter-flows are investigated for the proposed cost allocation method. The three proposed pricing methods are applied to the IEEE 24-bus reliability test system and compared with other pricing methods.