Computation of reliability based generation equivalence to a transmission facility in the new competitive electricity market

The electricity transmission system will be planned, operated and maintained by an independent transmission administrator in the new electric industry structure. The primary objective of an electricity transmission system in the new competitive environment would be to increase the market value of the services it provides with the right amount of reliability, and at the same time, lower its costs for operation, maintenance and construction of new facilities in order to provide lower rates for customers. The electricity transmission administrator will strive to achieve this objective via many different means, one of which is to defer a capital transmission facility requirements in favor of a generation solution by an independent generator to meet the growing customer load demand. In this case, the transmission capital investment deferral credit received by the independent generator will be dependent on the incremental system reliability improvement rendered by the transmission solution. In other words, the size, location and the reliability of the independent generator will be determined based on comparable incremental reliability provided by the transmission solution under consideration. This paper presents a probabilistic technique for determining generation equivalence to a transmission facility for use in transmission system planning studies in the new competitive environment.