Review of transmission fixed costs allocation methods

Abstract

In the context of competitive electricity markets, transmission fixed costs should be fairly allocated to transmission users. A reasonable allocation method could lead to efficient utilizations of existing transmission facilities and, at the same time, provide economic signals for guiding future generation planning and load sitting. In this paper, a comprehensive literature survey is made on available methods of transmission fixed cost allocations. The review is conducted from several different aspects including: costs to be allocated, entities to pay the costs, system states to be based on, cost allocations of unused capacities, pricing of counter flow and that of reactive power, and allocation principles and methods. In addition, the characteristics of each method are analyzed and compared with those of the others.