Assessment of MW-mile method for pricing transmission services: a negative flow-sharing approach

Abstract

A negative flow-sharing approach to allocate transmission transaction charges among users of transmission services is proposed. The approach uses the properties of the MW-mile method but takes into account the economic benefits of both trading parties by analysing their shares in negative power flow or counterflow. This approach is incorporated with the justified distribution factor for power flow tracing purposes. Two case studies based on a 5-bus system and an IEEE 14-bus system are used to illustrate the proposed approach. The results show that the proposed approach has merit over the traditional MW-mile approaches in the context of revenue reconciliation of transmission services, regardless of transaction arrangements and locations. The profit-sharing concept introduced here provides a better economic signal in allocating charges for counterflows, which could benefit trading parties.