Optimal transmission pricing with generation uncertainty and transmission losses

A technique to include uncertainties in generation availability in transmission price calculations based on the optimal pricing methodology and probabilistic production costing methodology is proposed. The method considers the possible outages of generators and their effect on meeting the system load and, thus, on the transmission prices. Transmission losses in the problem formulation are considered. A case study is presented using the IEEE 24-busbar reliability test system, where the effect of the proposed technique and that of transmission losses on the optimal transmission prices are demonstrated. It is concluded that the inclusion of generation uncertainty and proper treatment of transmission losses is an important part in the calculation of transmission charges and the presented model provides a possible approach in this regard.