Fixed Transmission Charges Based on the Degree of Network Utilization

Roman Korab, Henryk Kocot and Henryk Majchrzak
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Roman Korab: Department of Power System and Control, Faculty of Electrical Engineering, Silesian University of Technology, 44-100 Gliwice, Poland
Henryk Kocot: Department of Power System and Control, Faculty of Electrical Engineering, Silesian University of Technology, 44-100 Gliwice, Poland
Henryk Majchrzak: Department of Computer Science, Faculty of Electrical Engineering, Automatic Control and Informatics, Opole University of Technology, 45-758 Opole, Poland

Energies, 2021, vol. 14, issue 3, 1-19

Abstract: The core objective of transmission tariffs is the recovery of costs related to the transport of electricity. A usual component of a tariff is a fixed charge that covers the costs of the network infrastructure. As many customers use the power grid, the rate of this charge should reflect, as closely as possible, the actual costs of supplying energy to the individual consumers. These costs result from which network elements have been used in delivering the electricity, and to what extent these elements have been used. Therefore, the fixed transmission rates should depend on the degree of network utilization. This article investigates definitions of the degree of network utilization based on the active power flow. To calculate the degree of network utilization, the flow of electricity on a branch must be decomposed into the streams flowing to individual customers. For this decomposition, two methods are examined: a power flow tracing method, based on the proportional sharing principle, and an incremental power flow method, based on the superposition principle. The analyzed methodology is applied to a small test system for conceptual discussions, as well as to the transmission network of the Polish power system, as an example of practical application. The results of this study were then compared with the commonly used “postage stamp” method. Finally, several practical aspects related to the potential implementation of the presented methodology are discussed.

Keywords: electricity market; transmission pricing; fixed cost allocation; “postage stamp” method; power flow decomposition; proportional sharing principle; power flow tracing method; superposition principle; incremental power flow method (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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