Transaction cost allocation in deregulated power system using an analytical method

In the new deregulated environment, transmission cost allocation is one of the major challenges due to the increase of power transactions in transmission open access faced by the electric power sector. In this paper, Transaction Impact Factors (TIFs) are developed with respect to each transaction and used for the allocation of usage based transmission transaction costs. These factors relate the real power flow in the lines with the transacted power. This analytical method provides the impact of line flows without running power flow solution when the amount of transacted power changes in real time. The proposed method is evaluated by considering bilateral and multilateral transactions, and compared with Megawatt Modulus (MM) method on sample six bus and IEEE 30 bus systems.