Transmission network cost allocation based on equivalent bilateral exchanges

Abstract

This paper presents a novel methodology for allocating the cost of a transmission network to its users based on the principle of equivalent bilateral exchanges, which states that after all physical laws governing the flow of power have been met, each demand is assigned a fraction of each generation and each generator is assigned a fraction of each demand in a uniform manner. Transmission cost allocation based on this principle presents several advantages, namely, independence from the choice of the slack bus, recognition of counter-flows, and transmission use charges that are stable and always positive.