Framework for allocation of loss and security driven network capital costs in distribution systems

This paper presents a framework for development of time-of-use location-specific network use-of-system charges for distribution systems. The proposed framework is based on the concept of the reference network and treats the pricing problem as a two-stage process involving network design in the first instance followed by allocation of the resultant network capital costs amongst the users of the network. Network design is itself a two-stage process, beginning with determining the capacity for pure transport of electricity followed by the extra capacity required to satisfy quality of supply requirements. A conceptual framework is presented for determining both these capacities and their allocation in which emphasis is placed on the customer rather than the utility as the driver of network investment and performance.