Application of long-run network charging to large-scale systems

Charging methodology is one important scheme in the deregulated environment in the way that it can be utilized to recover the investment cost from network users according to their different impact on the network. The long-run incremental cost (LRIC) pricing methodology developed by University of Bath in conjunction with Western Power Distribution (WPD, UK) and Ofgem (the office of gas and electricity markets, UK) has drawn lots of attention from industry and academic circles and found its application in practice. Compared with the existing long-run cost pricing methodologies, this charging model can produce forward-looking charges that reflect both the extent of the network needed to serve the generation/demand and the degree to which the network is utilized. This paper examines the practical issues concerning implementation of this charging model in order to assist its utilization in the future. Firstly, the calculation and selection of the parameters, load growth rate, contingency factor, asset costs, that would impact charge evaluation are discussed, followed by the focus on some particular issues concerning them. Thereafter, the technical problems which might appear while applying this charging model to large-scale practical systems are dressed and a few feasible solutions are provided. This charging model, at last, is demonstrated on a practical system taken from the U.K. network.