Transmission cost allocation using the distribution factors method

One of the key problems of energy transmission system in an independent environment refers to necessity to establish a cost for system services on nondiscriminatory bases. The prices must to be simple and transparent. A properly established cost provides economical signals for short-term and long-term recovery current expenses and for a fair cost allocation for participants. This paper presents allocation of transmission costs to consumers and to generator using the distribution factors method. A detailed comparison between regime with active losses and the regime without active losses are presented. A case study based on a 12-node system is provided.