Transmission Embedded Cost Allocation under Open Access in Restructured Electricity Market

Electricity Power sector around the world is witnessed reforms from traditional regulated regime to a deregulated system. Under such environment electricity transmission sector is separated from Generation and Distribution. This natural monopoly further allow public and private sector to use existing transmission facility under “Open Access”. Under such structure, it is essential to system owner and operator to form a rational and transparent costing mechanism for independent transactions by the third party. This costing mechanism in terms of price should provide the correct economic signals to each market participants, to ensure market investment, reliability and secure and reliable operation of power system. Several methods and approaches have been investigated for allocation of transaction to recover embedded cost with varying degree of success. This study demonstrates conventional Postage Stamp, MW-Mile and MVA-Mile methods based on optimal power flow approach. The said methodology is implemented on practical power system for Maharashtra State Electricity Transmission Company Limited, India. The purpose of study is to recover and share transmission cost in term of tariff subject to system security and reliability of the power system. The results are computed and compared for power system conditions. This study concludes that the proposed methodology is suitable to recover embedded cost, ensures the economic advantages, system security and reliability of the power system and suitable for practical power system