Cost analysis in a rural power distribution system

An activity based distribution cost model, A POWER, is applied to a rural distribution system, where multiple classes or bilateral contracts of energy are assumed. In particular, primary and secondary energy classes are considered where these classes share both system costs and benefits. Also, the cost of losses is shared by explicitly treating power and energy losses in the model. Different approaches to sharing other cost factors are suggested. The model is tested on an actual rural distribution network in Iceland and delivery and distribution costs are compared, with respect to rural and community delivery, voltage levels and bilateral contracts. Results can form a basis for designing transmission and distribution tariffs for network companies and can help shape the regulating environment for these companies by developing a unified framework in distribution system cost estimation.