Transmission network cost allocation via nodal methodology considering different dispatching scenarios and tariff zones

This paper presents a new methodology for allocation of transmission system costs in electricity markets established in one single area or composed by the interconnection of multiple subsystems. Initially, the proposed method allows the decomposition of the total cost of transmission in two installments: the first, referring to the utilized capacity of the network (estimated at a predetermined operating point), and the second, to the transmission capacity still available in the system. A subsystem decomposition technique of the nodal tariffs also ensures the applicability of the method in interconnected markets. From the decomposition rates, it is possible to assess the responsibility of each participant on the cost of use of any specified set of transmission elements. The flexibility of the method enables an allocation via postage stamp costs (i.e., pro-rata), related to interconnection lines and/or high systemic importance circuits. After the presentation of the mathematical formulation, a procedure for the consideration of multiple operating points (dispatching scenarios) is proposed to evaluate nodal prices and also a new algorithm to determine zonal tariffs, i.e., applicable to all generators or loads at the zone. The proposed approach is described in detail and illustrated by numerical applications to the Brazilian interconnected system.