Transmission Loss Cost Reconciliation In Alberta´s Deregulated Electric Market

One major challenge in a de-regulated electric market is to allocate transmission losses and recover loss costs. In order to fully recover the transmission loss costs, the Alberta Electric System Operator (AESO), the independent system operator (ISO) in the Province of Alberta Canada, has introduced a new prospective methodology based on its provincial law to reconcile the transmission loss revenues to loss costs, starting January 1, 2006. In the reconciliation process, a quarterly calibration factor (CF) is calculated to track the variance between loss costs and revenues. The CF is applied to all loss factor customers. The methodology plays an important role in Alberta´s electric market and is based on the accounting process of initial, interim and final settlement using the actual and forecasted input data for the CF calculation. The paper describes the methodology with practical results of the current transmission loss cost reconciliation process being used in Alberta.