Usage based allocation for transmission costs under open access

This paper analyses some issues related to the transmission cost allocation for grids with open access. Allocation methods based on electricity tracking are presented and compared with methods based on sensitivities as well as with the postage stamp rate. The main purpose is to appraise in a critical manner the practicality of these methods and their capacity to send efficient economical signals. Full and usage capacity pricing are presented in contrast. Three options for dealing with counter flows are considered and their influence on cost recovery under used capacity pricing is outlined. The pricing strategies and methodologies are depicted for a 9-bus test-system including pool, bilateral and wheeling transaction.