Multiarea transmission network cost allocation

This paper deals with the problem of transmission cost allocation (TCA) in very large networks with multiple interconnected regions or countries. The basis of one scheme recently put forward is a single-area TCA algorithm from which inter-regional compensations are computed. One concern about this approach is that an international operator (IO) must have access to detailed information that autonomous regions or countries may not be willing or able to share. This led to the development of a new multiarea TCA scheme, called multiarea decoupled (MAD), in which each region carries out its own TCA, while the IO carries out a region-wise TCA on the network of tie lines. In MAD, the IO does not require detailed and possibly proprietary information about regional networks, relying only on the characteristics of the tie-line network and the extent to which each region uses such a network. This is a key issue, especially in North America, considering FERC's intention to provide Regional Transmission Organizations (RTOs) with exclusive autonomy to provide transmission service and to set and administer their own transmission-use tariffs. Numerical studies on the proposed scheme are described, including a four-area system based on the IEEE reliability test system (RTS) network.