Transmission cost allocation in multi-area power pool operation

In an interconnected power system pool where generation is centrally dispatched, the generating responsibility and the scheduled interchange power level of each member are determined by a central authority. In order to derive an equitable method for cost reimbursement and benefit allocation among all members of a pool, a proper basis for operating cost allocation to different transmission transactions is essential. In this paper an attempt is made to break down the scheduled interchange power levels in a centrally dispatched pool into multiple “one buyer and one seller” type bilateral transactions. The magnitude of each bilateral transaction and its associated loop flow transmission costs will be useful for cost reimbursement and benefit sharing. An algorithm is developed to solve the cost allocation problem by iteratively using a multi-area full AC optimal power flow (AC-OPF) program. The theory and implementation is illustrated through a case study. The effects of changes of system parameters such as the system loading and transmission line capacity is demonstrated