The use of game theory in transmission embedded cost allocation

The changing structure of the electricity supply industry and the emergence of independent power producers and independent customers is bringing transmission pricing into a new focus. A method for transmission line embedded cost allocation among transmission transactions accounting for line capacity-use is presented. Line capacity-use is determined by the amount of power transmitted. Capacity-use is determined using a full AC power flow and hence the effects of reactive power can also be investigated. The cost allocation to each transaction according to the capacity-use patterns throughout an accounting period during which system loading is varying will be studied.