Cost-Benefit Reflective Distribution Charging Methodology

Abstract

This paper describes the principle and implementation of a new MW+MVAr-Miles charging methodology, which was developed to reflect three key cost drivers in distribution network development: the distance used to support nodal real and reactive power injection/withdrawal; the degree of support offered by the network assets; and the operating condition of the supporting assets in terms of their power factors. The inclusion of the latter driver allows the developed charging methodology to reward network users who are contributing to better power factors and better network utilization, while penalizing customers who worsen power factors and network utilization. As a consequence, the charging model is able to provide forward-looking incentives for network customers to behave in a manner to better the network condition, which will in turn help to reduce the cost of future network development. In addition, the separation of real and reactive power pricing would give network users clear indications of the cost of their reactive power draw from the network, which in turn could help them to evaluate the economics in investing in reactive power compensation devices. The proposed charging methodology is demonstrated on a practical eight-busbar distribution system with a mixed demand and embedded generation (EG). This paper results from work undertaken in a project on distribution charging methodologies for Western Power Distribution. The views in this paper expressed are not those of Western Power Distribution.