Optimal Transmission Pricing Scheme with Consideration of System Reliability

Abstract

The power industry has become an essential driver of economic progress in our country. Over the past couple of decades, the electricity market has experienced significant transformations in its structure, primarily due to deregulation, which has fostered competition among power generators. However, this deregulation has presented several challenges, including the allocation of transmission embedded costs, effective management of losses, and addressing congestion issues within the integrated market. Within this framework, the cost of transmitting electricity imposed on consumers assumes a critical role as it serves as a variable that can be controlled within the power system. This variable provides valuable signals to generator owners in making decisions about the location, type, and timing of their installations. Moreover, it plays a crucial role in defining the overall efficiency of the market. The primary objective of transmission pricing methodologies is to ensure fair competition within the electricity sector and offer reliable economic indicators. As part of this process, users are required to pay fees for network access and usage to the entity responsible for the network. Various methodologies exist for determining the pricing of transmission usage and access, each serving its purpose in promoting a robust and equitable electricity market