A Methodology for Allocating the Annual Revenue Requirement of a Transmission Network

We propose an allocation methodology for recovering the annual revenue requirements (ARR) of a network. The methodology adheres to the worldwide practices of allocating the ARR to either the load or both the load and generation. The allocation results in a charge for the load and/or generation buses of the network. The charge of a bus relies on the power transfer distribution factor (PTDF) associated with each transmission line of the network and thus is sensitive to the topology of the network and the location of the bus with respect to other buses. We used the IEEE 24-bus reliability test system (RTS) network for testing the proposed allocation methodology and comparing it with existing cost allocation methodologies.