Revenue reconciled optimum pricing of transmission services

This paper describes a methodology for evaluating an optimal set of transmission prices, to be charged for use of a transmission system on a time-of-use basis. The transmission prices are determined by maximising the global benefit of using the transmission system that allocates both capacity and operational costs. The security considerations are explicitly taken into account by incorporating security factors in the algorithm. The important issue of revenue recovery by the transmission utility is addressed by modifying the optimum prices without affecting the consumer behaviour. This can be achieved by setting the prices within indifference intervals over which consumers are insensitive to transmission prices. Application of the methodology is illustrated on the IEEE 24 bus test system