Integrating the Transmission Loss Component with the Distribution Factors Enhanced Transmission Pricing Method for Efficient Transmission Use of System Charges

Abstract-This article proposes a transmission pricing method that integrates the transmission loss component with the distribution factors enhanced transmission pricing method for the pool electricity market. Two new schemes are proposed: (1) New Scheme 1-the losses are allocated only for the locational charges and (2) New Scheme 2-the losses are allocated for both locational and non-locational charges. Both methods use justified distribution factors to evaluate the transmission line flows more accurately. The transmission losses are allocated among the market users by integrating the generalized generation justified distribution factors and generalized load justified distribution factors with the modified pro-rata method. The proposed approach is tested on the 10-machine IEEE 39-bus (New England) system to prove its effectiveness. Results show that the proposed method is able to reconcile transmission service cost fairly.