Investigation on cost reflective network pricing and modified cost reflective network pricing methods for transmission service charges

Nowadays many developing countries have been undergoing a restructuring process in the power electricity industry. Australia is one of the countries that have implemented the restructuring process. The Australian National Electricity Market (NEM) has started from 13 December 1998, began operating as a wholesale market for supply of electricity to retailers and end-users. In this restructuring electricity market, one of the important issues is the transmission pricing. Transmission pricing is a service that recovers of existing and new cost of transmission system. The regulation of the transmission pricing is important in determining whether the transmission service system is economically beneficial to both side of the users and utilities. Therefore, an efficient transmission pricing methodology plays an important role in the Australian NEM. In this paper, the transmission pricing methodologies that have been implemented by the Australian NEM which are the Cost Reflective Network Pricing (CRNP) and Modified Cost Reflective Network Pricing (MCRNP) methods are investigated for allocating the transmission service charges to the transmission user. A case study of 24-bus system is used in order to identify the best method that reflects an efficient transmission service charge.