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Assessment of MW-mile method for pricing transmission services: a negative flow sharing approach

Lo, K.L. and Hassan, M.Y. and Jovanovic, S. (2007) Assessment of MW-mile method for pricing transmission services: a negative flow sharing approach. IET Generation Transmission and Distribution, 1 (6). pp. 904-911. ISSN 1751-8687

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Abstract

A negative flow-sharing approach to allocate transmission transaction charges among users of transmission services is proposed. The approach uses the properties of the MW-mile method but takes into account the economic benefits of both trading par-ties by analysing their shares in negative power flow or counterflow. This approach is incorporated with the justified distribution factor for power flow tracing purposes. Two case studies based on a 5-bus system and an IEEE 14-bus system are used to illustrate the proposed approach. The results show that the proposed approach has merit over the traditional MW-mile approaches in the context of revenue reconciliation of transmission services, regardless of transaction arrangements and locations. The profit-sharing concept introduced here provides a better economic signal in allocating charges for counterflows, which could benefit trading parties.