Review of usage-based transmission cost allocation methods under open access

This paper presents an overview of usage-based methods of transmission cost allocation under open access. Allocation of transmission costs involves both technical and regulatory issues, and as a result, the methods available in the literature differ in their definition and measure of the "extent of use" of transmission resources. The primary objective of this paper is to provide a summary of techniques used for designing fair and equitable access fees for the recovery of fixed transmission costs. The discussion is thus organized under two major subtopics: algorithms for transmission usage evaluation and alternative pricing strategies. Numerical examples are provided to show the results using different methods.